Minority Depository Institution Preservation Program, 14113-14119 [2024-03603]
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Federal Register / Vol. 89, No. 38 / Monday, February 26, 2024 / Notices
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[FR Doc. 2024–03861 Filed 2–23–24; 8:45 am]
BILLING CODE 7510–13–P
NATIONAL CREDIT UNION
ADMINISTRATION
[NCUA–2023–0070]
Minority Depository Institution
Preservation Program
National Credit Union
Administration (NCUA).
ACTION: Final interpretive ruling and
policy statement.
AGENCY:
The NCUA Board is issuing
revisions to Interpretive Ruling and
Policy Statement (IRPS) 13–1, regarding
the Minority Depository Institution
Preservation Program for credit unions.
DATES: The revised IRPS is effective
March 27, 2024.
FOR FURTHER INFORMATION CONTACT:
Supervisory Program Manager Kristi
Kubista-Hovis or Program Manager
Pamela Williams, Office of Credit Union
Resources and Expansion, 703–518–
6610 or CUREMDI@ncua.gov.
SUMMARY:
SUPPLEMENTARY INFORMATION
I. Background
Congress enacted the Financial
Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA) in
response to the savings and loan
industry crisis.1 FIRREA included
provisions designed to encourage
federal financial regulators to preserve
and promote minority depository
1 Public
PO 00000
Law 101–73, 103 Stat. 183 (1989).
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14113
institutions.2 Specifically, FIRREA
section 308 required the Secretary of the
Treasury to consult with the Office of
Thrift Supervision (OTS) and the
Federal Deposit Insurance Corporation
(FDIC) on best methods to achieve the
following goals:
• Preserving the number of minority
depository institutions;
• Preserving the minority character of
a minority depository institution
involved in a merger or acquisition;
• Providing technical assistance to
prevent the insolvency of minority
depository institutions;
• Encouraging the formation of new
minority depository institutions; and
• Providing training, technical
assistance, and educational programs to
minority depository institutions.3
Those agencies developed various
initiatives aimed at preserving federally
insured banks and savings institutions
that meet FIRREA’s definition of a
minority depository institution.4
In 2010, Congress enacted the DoddFrank Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act).5
Section 367(4)(A) of the Dodd-Frank Act
expanded FIRREA section 308 to require
the Secretary of the Treasury to consult
with the National Credit Union
Administration (NCUA) and the Board
of Governors of the Federal Reserve
System, in addition to the FDIC and the
Office of the Comptroller of the
Currency on methods for best achieving
the FIRREA goals.6 Section 367(4)(B) of
the Dodd-Frank Act also amended
FIRREA section 308 to require each
agency to submit an annual report to
Congress describing actions it has taken
to preserve and encourage minority
depository institutions.7
In 2013, the NCUA Board (Board)
proposed Interpretive Ruling and Policy
Statement (IRPS) 13–1 to establish a
Minority Depository Institution
Preservation Program to encourage the
preservation of minority depository
institutions and the establishment of
new ones.8 In 2015, the Board approved
final IRPS 13–1, establishing the
2 Id. Title III, sec. 308, 103 Stat. 353, codified at
12 U.S.C. 1463 note, ‘‘Preserving Minority
Ownership of Minority Financial Institutions.’’
3 Id. sec. (a). The Office of the Comptroller of the
Currency and the Board of Governors of the Federal
Reserve System also initiated minority depository
institution programs to comply with the spirit of
FIRREA section 308, even though neither was
originally required to do so. OTS became part of the
Office of the Comptroller of the Currency on July
21, 2011.
4 Id. sec. (b).
5 Public Law 111–203, 124 Stat. 1376 (2010); 12
U.S.C. 5301 et seq.
6 12 U.S.C. 1463 note sec. (a).
7 Id. sec. (c).
8 78 FR 46374 (July 31, 2013).
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NCUA’s Minority Depository Institution
Preservation Program, administered by
the agency’s Office of Minority and
Women Inclusion (OMWI).9 Consistent
with the statutory language, IRPS 13–1
required that for designation as an
minority depository institution, the
majority of a credit union’s members,
the majority of its board, and the
majority of the ‘‘community it services,
as defined in its charter’’ must be
eligible minorities. An eligible minority,
under FIRREA section 308, is any Black
American, Asian American, Hispanic
American, or Native American.
The Board restructured the agency in
2018. Among other changes, the
restructuring created the Office of Credit
Union Resources and Expansion
(CURE). At that time, CURE assumed
administration of the NCUA’s Minority
Depository Institution Preservation
Program from OMWI.
In June 2023, the Board invited
comment on proposed revisions to IRPS
13–1.10 The proposed revisions
included:
• Updating the administering office to
CURE to reflect the agency’s current
structure;
• Clarifying that the meaning of
‘‘community it services,’’ means a credit
union’s field of membership;
• Adding a reference to agency
guidance to examiners regarding
supervision of minority depository
institutions;
• Clarifying the process for reviewing
a minority depository institution’s
designation status; and
• Adding new subsection headings
and expanding the discussion of agency
actions and policies in the areas of
minority depository institution
engagement, technical assistance,
examinations of minority depository
institutions, grants and loans, and
training.
The Board invited comment on all
aspects of the IRPS, including
suggestions for any other information or
resources the agency could provide to
assist credit unions that are minority
depository institutions.
II. Summary of Comments on Proposed
Changes to IRPS 13–1 and Final IRPS
The NCUA received five comments on
the proposed changes. All commenters
were broadly supportive of minority
depository institutions and the NCUA’s
Minority Depository Institution
Preservation Program. Commenters
noted that minority depository
institution credit unions provide
important benefits to their communities,
11 IRPS 87–2, as amended by IRPS 03–2 and IRPS
15–1, available at https://ncua.gov/files/
publications/irps/IRPS1987-2.pdf.
9 80
FR 36356 (June 24, 2015).
10 88 FR 42105 (June 29, 2023).
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including by offering services to those
excluded from the mainstream financial
system, providing safe and affordable
alternatives to predatory lenders, and
stimulating economic growth in the
communities they serve. Most of the
commenters also had suggestions for
changes to the IRPS and ways in which
the NCUA can better support minority
depository institutions. After
considering the comments, as discussed
below, the Board is adopting the IRPS
substantially as proposed.
One commenter requested that the
NCUA extend or reopen the comment
period, stating that some stakeholders
may have been unaware of the proposed
IRPS due to current industry and
economic challenges. The Board is not
extending or reopening the comment
period. The original IRPS includes
outdated references and the Board
provided the standard 60 days for
comments under NCUA rulemaking
procedures.11 Further, the comments
received represented input from a
variety of interested parties. One letter,
from a trade association focused on
community development and minority
depository institution credit unions, had
42 co-signers, including 38 individual
minority depository institution credit
unions, a national credit union trade
association, a state credit union trade
association, and groups representing
minority depository institution credit
unions and credit union professionals.
Another national trade association, a
trade association for state credit union
regulators, and one state-level trade
association also submitted comments.
Every commenter expressed support for
the IRPS and the mission and purpose
of minority depository institutions.
Additionally, many minority depository
institution credit unions are members of
one or more of the associations that
submitted comments. Considering the
broad representation of credit union
industry perspectives among the
commenters, the Board finds that the
comment period was adequate to ensure
that it received sufficient feedback on
the proposal.
Another commenter requested that
the NCUA amend the eligibility
standards so that credit unions that
meet as few as one of the three required
criteria could become minority
depository institutions, instead of the
requirement in the existing and
proposed IRPS that all three criteria be
met. This commenter noted challenges
in establishing that a majority of ‘‘the
community it services’’ is made up of
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minorities. This change is not supported
by the statute, which requires that a
mutual institution meet all three
standards to become a minority
depository institution. The statute
specifically requires that for a mutual
institution to qualify as a minority
depository institution, a majority of the
board of directors, a majority of the
account holders, and a majority of ‘‘the
community which it services’’ are
minorities.12 The Board’s longstanding
interpretation of the statutory
requirement is that credit unions are
subject to the requirements for mutual
institutions.13
Similarly, another commenter
requested an expansion of the minority
depository institution criteria to include
all credit unions that commit to
minority depository institution
principles, that have some minority
depository institution characteristics, or
that have a minority depository
institution credit union merge into
them. The Board reiterates that the
statute establishes the requirements for
minority depository institution
designation and permitting differing
eligibility requirements would not
comply with the statute.
Another commenter commended the
NCUA for recognizing the uniqueness of
minority depository institutions and the
need for a tailored approach to
examination and supervision of them.
This commenter recommended that the
NCUA increase efforts to promote and
support the minority depository
institution mentorship program and be
proactive in providing more resources to
minority depository institutions, such as
regulatory updates, best practices, and
opportunities for training. Through
CURE, the NCUA communicates
opportunities and resources to minority
depository institution credit unions,
such as through social media and direct
email. The NCUA offered a Minority
Depository Institution Mentoring
Program from 2020–2022 in conjunction
with the then Minority Depository
Institution Mentoring grant initiative.
Feedback from participating mentees
and mentors was overall positive, yet
there was not sufficient participation to
sustain the program. The agency will
continue to seek opportunities to
support minority depository institution
credit unions and increase their
awareness of opportunities.
One commenter suggested the NCUA
consider offering technical assistance
12 Title III, sec. 308, Public Law 101–73, 103 Stat.
353 (1989), as amended by title III, sec. 367(4),
Public Law 111–203, 124 Stat. 1556 (2010), codified
at 12 U.S.C. 1463 note.
13 80 FR 36356, 36357 (June 24, 2015).
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funding support to very small minority
depository institution credit unions and
minority depository institution credit
unions that are managing significant
challenges, such as identified in their
examination reports. The Board notes
that for the first time during 2023 a
minority depository institution could
receive Community Development
Revolving Loan Fund funding regardless
of its low-income designation status.
Such funding may be used for technical
assistance in accordance with grant
requirements. The NCUA’s Small Credit
Union and Minority Depository
Institution Support Program offers
technical assistance to address
challenges such as those identified in
their examination reports. This
assistance is provided at no additional
cost to participating credit unions.
Another commenter opined that it
would be helpful if the agency provided
additional transparency around
examination standards for minority
depository institution credit unions and
explained how these examination
standards differ from standard
procedures. While examination
standards for MDIs and non-MDI credit
unions are the same, the Board notes
that the NCUA provides guidance for
examiners to consider the MDI’s
mission, unique characteristics, and
tailored strategies during an
examination. This same commenter
suggested creating a group of examiners
focused on small minority depository
institution credit unions and extending
regulatory flexibility to all small
minority depository institution credit
unions. These suggestions go beyond
the scope of the proposed revisions to
the IRPS and were provided to
applicable NCUA offices to consider.
During 2023, the NCUA developed peer
metrics in order for examiners to
compare minority depository
institutions with minority depository
institutions. The agency also issued
customized guidance to examiners to
provide insights into minority
depository institutions’ unique business
models and members’ needs. The
guidance assists examiners in
understanding minority depository
institutions’ distinct business model
compared to other mainstream financial
institutions by providing instruction on
how to use minority depository
institution peer metrics instead of
traditional peer metrics.
Commenters also requested the NCUA
provide resources to minority
depository institution credit unions for
specific purposes, such as travel support
to enable participation in the NCUA’s
in-person events, access to an
interactive analysis tool that would
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simplify the process of determining
whether an area meets the concentration
of facilities test, and additional
information about how to track and
store member demographic data for
purposes of minority depository
institution certification. These
suggestions were provided to applicable
NCUA offices to consider.
Finally, one commenter requested
that the NCUA consider supporting the
establishment of a fund similar to the
Mission-Driven Bank Fund.14 This
commenter also encouraged the NCUA
to advocate for more inclusion of
minority depository institution credit
unions in opportunities provided by the
Economic Opportunity Coalition. As the
Economic Opportunity Coalition is
established and funded by the private
sector, the Board believes it is not
appropriate to take an advocacy role
with respect to this organization. The
NCUA is researching the feasibility of
the establishment of a fund similar to
the Mission-Driven Bank Fund and will
inform stakeholders of the outcome of
the research. It should be noted that the
NCUA engages with other federal
agencies to educate them about credit
unions, ensure access to applicable
resources, and to host webinars about
resources they offer minority depository
institutions. Examples include
engagement with the Community
Development Financial Institutions
(CDFI) Fund concerning changes to the
requirements for CDFI certification, and
engagement with the U.S. Department of
the Treasury to facilitate credit union
access to the Emergency Capital
Investment Program. The NCUA will
continue to engage with other
government entities to further support
minority depository institution credit
unions, consistent with its mission and
statutory authorities.
In summary, the Board appreciates
the various suggestions from
commenters and, as noted above, will
consider whether and how to
implement some of the suggestions. The
final paragraph of the IRPS also states
that the NCUA’s annual report to
Congress will include a discussion of
the feedback it has solicited and
received from minority depository
institution credit unions on the
effectiveness of the agency’s minority
depository institution support and
preservation activities. The Board
believes that, should it determine to
adopt some of the suggestions, further
14 The Mission-Driven Bank Fund is an initiative
of the Federal Deposit Insurance Corporation
developed for FDIC-insured Minority Depository
Institutions and Community Development Financial
Institutions.
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14115
changes to the IRPS would not be
necessary.
After carefully considering the
alternatives offered by these
commenters, the Board adopts the
revisions to IRPS 13–1 as proposed,
with a few minor grammatical and
stylistic changes and one correction.
The stylistic changes are that the final
IRPS consistently uses the phrase ‘‘field
of membership,’’ (FOM) instead of the
phrase ‘‘potential members’’ that the
proposed IRPS had carried over from
the prior version. This change makes the
language of the entire IRPS consistent
with the clarification that ‘‘community
it services’’ means FOM.
Additionally, the proposed IRPS
mischaracterized the agency’s practice
in stating that technical assistance is
offered annually to each minority
depository institution credit union, and
the final version of the IRPS deletes this
sentence. The Board emphasizes that
the change in the language of the IRPS
does not change the availability of
technical assistance resources for
minority depository institution credit
unions, including through the
Community Development Revolving
Loan Fund’s grants and loans and
through the Small Credit Union and
Minority Depository Institution Support
Program.
Authority: 12 U.S.C. 1463 note; Sec.
308, Pub. L. 101–73, 103 Stat. 353; as
amended by Sec. 367(4), Pub. L. 111–
203, 124 Stat. 1556.
III. Interpretive Ruling and Policy
Statement 13–1, Minority Depository
Institution Preservation Program, as
Amended
The text of IRPS 13–1 follows:
a. Goals and Objectives of the Minority
Depository Institution Preservation
Program
Minority depository institutions play
an important and unique role in
promoting the economic viability of
minority and underserved communities.
Through its Minority Depository
Institution Preservation Program, the
NCUA engages in a range of efforts to
preserve minority depository
institutions and foster their success. The
Minority Depository Institution
Preservation Program is designed to
comply with section 308 of the
Financial Institutions Reform, Recovery
and Enforcement Act of 1989 (FIRREA),
which requires the NCUA to submit an
annual report to Congress summarizing
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its actions taken in furtherance of
section 308’s goals to: 15
• Preserve the present number of
minority depository institutions;
• Preserve the minority character of
minority depository institutions
involved in mergers and acquisitions;
• Provide technical assistance to
prevent insolvency of minority
depository institutions that are not now
insolvent;
• Promote and encourage the creation
of new minority depository institutions;
and
• Provide training, technical
assistance, and educational programs for
minority depository institutions.
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b. Description of the Minority
Depository Institution Preservation
Program
The NCUA’s Minority Depository
Institution Preservation Program
consists of proactive steps and outreach
efforts to promote and preserve minority
depository institutions in the credit
union system. The NCUA’s Office of
Credit Union Resources and Expansion
(CURE) administers the agency’s
Minority Depository Institution
Preservation Program and will meet
periodically with state regulators, other
federal regulators, and other
stakeholders to discuss outreach efforts,
share ideas, and identify areas to work
together to assist minority depository
institutions.
The NCUA offers minority depository
institution-designated credit unions a
variety of initiatives to assist in
preserving the economic viability of
their institutions. The initiatives
include technical assistance,
educational opportunities, and funding.
Examples of such initiatives include the
following:
• Consulting and support programs;
• Trainings; and
• Grants and loans through the
NCUA’s Community Development
Revolving Loan Fund (CDRLF), subject
to eligibility.16
Examples of broad-based and
individualized technical assistance
include the following:
• Providing guidance in resolving
examination concerns;
• Helping minority depository
institutions locate new sponsors,
mentors, or merger partners;
15 Title
III, sec. 308, Public Law 101–73, 103 Stat.
353 (1989), as amended by title III, sec. 367(4),
Public Law 111–203, 124 Stat. 1556 (2010), codified
at 12 U.S.C. 1463 note.
16 Prior to 2023, under the annual appropriations
statutes, grants and loans from the CDRLF were
historically only available to low-income
designated credit unions, some of which are also
minority depository institutions. However, not all
minority depository institutions have a low-income
designation.
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• Assisting with field of membership
expansions;
• Supporting management in setting
up new programs and services;
• Attempting to preserve the minority
character of failing institutions during
the resolution process; and
• Aiding groups that are interested in
chartering a new minority depository
institution.
Engagement With Minority Depository
Institutions
The NCUA’s Minority Depository
Institution Preservation Program will
provide periodic engagement with
minority depository institutions through
interaction with headquarters and field
staff. This interaction includes:
• sharing information and expertise
on supervisory topics;
• using various venues to engage in
an open dialogue between the NCUA,
minority depository institutions, and
related organizations;
• seeking feedback on the NCUA’s
efforts under the Minority Depository
Institution Preservation Program; and
• providing a variety of training
opportunities hosted or sponsored by
the NCUA.
The NCUA’s outreach also includes
seeking out, working with, and
supporting groups interested in
applying for a new federal or state
charter with a minority depository
institution designation and aiding
existing credit unions interested in
receiving the minority depository
institution designation.
Technical Assistance
The NCUA will provide technical
assistance to a minority depository
institution upon request. A minority
depository institution should contact its
assigned NCUA regional office,
supervisory examiner, or district
examiner to request technical
assistance.
Technical assistance is not an
examination or supervisory activity and
will be provided separately from
examination and supervision contacts.
Technical assistance includes, but is not
limited to, assistance in understanding
applicable laws and regulations, agency
processes, reporting requirements,
supervisory guidance, accounting
standards, supervisory findings and
conclusions (only after the conclusion
of the applicable examination or
supervision contact), applications or
requests for agency approval or action
(such as field of membership, bidding
on a failing institution, regulatory
waivers), and assistance in designating
as a minority depository institution. In
providing technical assistance, agency
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staff will not perform tasks expected of
an institution’s management or
employees. And while they may help
the institution understand how to apply
or bid, agency staff will not assist or
guide the institution in developing the
substance of such application or bid.
Examinations of Minority Depository
Institutions
Minority depository institutiondesignated credit unions have a unique
role in promoting the economic viability
of minority and underserved
communities, at times necessitating
distinct approaches to taking and
managing the related financial and
operational risks. The NCUA expects
examiners to recognize the distinctive
characteristics and differences in core
objectives of each financial institution
and consider these when evaluating the
institution’s financial and operational
condition and related management
practices. Examiners will evaluate a
minority depository institution using,
among other things, peer metrics such
as through the Financial Performance
Report.
The NCUA provides examiners
guidance to educate them about the
unique challenges faced by minority
depository institutions and the support
and services the NCUA offers to help
minority depository institutions address
such challenges. The guidance
acknowledges, at times, some minority
depository institutions may need more
or different support from the NCUA
than other credit unions. The guidance
also lists specific types of technical
assistance a minority depository
institution may request of the NCUA. It
also advises that minority depository
institutions often have unique
memberships and provide financial
services to consumers and businesses in
communities that might not otherwise
have access to another federally insured
financial institution. Therefore, the
policies, processes, risks, and practices
of minority depository institutions may
vary and comparison to other credit
unions based solely on similar size may
have limited value. Instead, examiners
are instructed to assess each minority
depository institution based on its
unique strategy and membership.
CDRLF Grants and Loans
The CDRLF provides loans and grants
to low-income designated credit unions,
some of which are also designated as
minority depository institutions, to
expand outreach to underserved
populations, improve digital services
and cybersecurity, provide staff training,
and support capacity-building
programs, as examples. The
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Consolidated Appropriations Act for
fiscal year 2023 made minority
depository institutions without the lowincome designation eligible for CDRLF
grants and loans through September 30,
2024.17
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Training and Education
The NCUA offers training to credit
unions including minority depository
institutions, through various formats
such as webinars, online courses,
videos, and in-person events. Through
the NCUA Learning Management
System, the agency offers training and
educational resources to credit union
board members, management,
employees, and volunteers online and at
no charge. Examples of the content
provided include guidance on credit
union operations, compliance,
community partnerships, and strategic
planning.18
Preservation of Minority Depository
Institutions
With regard to a potentially failing
minority depository institution or the
need for an assisted merger of a
minority depository institution, as with
any insured credit union, the Board will
consider providing section 208
assistance under the Federal Credit
Union Act to reduce the risk or avert a
threatened loss to the National Credit
Union Share Insurance Fund (NCUSIF),
facilitate a merger or consolidation, or to
prevent the closing of a credit union
that the Board determines is in danger
of closing.19 Requirements concerning
field of membership apply to most
mergers. In addition, the NCUA must
consider resolution costs and safety and
soundness implications for all mergers.
The NCUA will make every effort to
preserve the minority character of
failing minority depository institutions
during the resolution process. In the
event of the potential failure of an
minority depository institution, the
agency will contact minority depository
institutions in the NCUA’s merger
registry that qualify to bid on a
particular failing institution. Agency
staff will solicit interest in bidding on
the failing minority depository
institution and offer technical assistance
to any minority depository institution
desiring to bid. The NCUA will also
provide minority depository institutions
interested in submitting a bid with an
17 Div. E, title V, Public Law 117–328, 136 Stat.
4690 (2022). Refer to the Grants and Loans section
of the NCUA website for eligibility requirements in
future periods.
18 These training opportunities are accessible to
all credit unions through the Learning section of the
NCUA’s website.
19 12 U.S.C. 1788(a)(1)–(2).
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additional two weeks to submit a bid
whenever possible. Except in the cases
of conservatorships, liquidations, or
assisted mergers, the minority
depository institution’s board of
directors is generally the decision-maker
on a merger partner provided the
selection is consistent with regulatory
and safety and soundness standards. For
conservatorships, liquidations, or
assisted mergers, in the selection
process, the NCUA will consider all the
requirements applicable to a merger or
purchase and assumption, including
FIRREA’s general preference
guidelines.20
c. Minority Depository Institution
Designation Eligibility
The agency adopted the definition of
a minority depository institution in
FIRREA section 308 that applies to a
mutual institution.21 Accordingly, a
credit union is eligible to receive the
minority depository institution
designation if it meets all the following
criteria:
• A majority of its current members
are from any of the eligible minority
groups;
• A majority of the members of its
board of directors are from any of the
eligible minority groups; and
• A majority of the community it
services, as designated in its field of
membership, are from any of the eligible
minority groups.
For minority representation to be a
‘‘majority,’’ it must be greater than 50
percent.
The NCUA relies on the FIRREA
section 308 ‘‘minority’’ definition to
identify an eligible minority as any
Black American, Asian American,
Hispanic American, or Native
American.22 For the purpose of this
IRPS, Asian American includes anyone
who is Native Hawaiian or Other Pacific
Islander, and Native American includes
anyone who is American Indian or
Alaska Native. Also, for the purpose of
minority representation under the
minority depository institution
definition, an individual who falls into
more than one of the minority categories
will be considered as a single, eligible
minority.
A credit union that meets the
eligibility requirements can self20 Generally, the NCUA is involved in the
selection process when the transaction will cause
a loss to the NCUSIF or when the failing credit
union is in conservatorship and the NCUA Board
is the conservator. For additional information on
the NCUA’s selection process, see Letter to Credit
Unions 10–CU–11, Information on NCUA’s Merger
and Purchase & Assumption Process.
21 12 U.S.C. 1463 note sec. (b)(1)(C).
22 Id.
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14117
designate as a minority depository
institution by following the guidelines
as specified on the NCUA’s website. The
instructions to the NCUA’s Credit Union
Profile form, which credit unions use to
self-designate as a minority depository
institution, contain detailed directions
on how to make the designation.23 A
minority depository institution may
participate in the NCUA’s Minority
Depository Institution Preservation
Program subject to the eligibility
requirements of any specific initiative.
An eligible credit union’s decision to
designate as a minority depository
institution or to participate in the
Minority Depository Institution
Preservation Program is voluntary.
A credit union defined as a ‘‘small
credit union’’ by the NCUA under the
Regulatory Flexibility Act (RFA) may
self-designate greater than 50 percent
representation among its current
members, and within the community it
services (field of membership), based
solely on knowledge of those members.
Under the RFA, the NCUA currently
defines a small credit union as a credit
union with total assets of less than $100
million.24
A credit union not defined as a small
credit union by the NCUA may rely on
one of the following methods, as
applicable, to determine the minority
composition of its current membership
exclusively and of the community it
services. The credit union must
maintain documentation supporting its
minority depository institution selfdesignation.
1. The credit union may ascertain the
minority representation using
demographic data from the U.S. Census
Bureau website, based on the area(s)
where the current membership or field
of membership resides, such as a
township, borough, city, county, or
Metropolitan Statistical Area. If the U.S.
Census data—for example, census tracts,
zip codes, townships, boroughs, cities,
or counties—shows the area’s
population comprises mostly eligible
minorities, the credit union may assume
that its current membership and the
community it services each have the
same minority composition as the
Census data indicates.
2. The credit union may use Home
Mortgage Disclosure Act (HMDA) data
to calculate the reported number of
minority mortgage applicants divided
by the total number of mortgage
applicants within the credit union’s
membership. If the share of minority
23 NCUA Form 4501A, https://ncua.gov/files/
publications/regulations/credit-union-profile-forminstructions-4501A-sept-2022.pdf.
24 80 FR 57512 (Sept. 24, 2015).
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representation among applicants is
greater than 50 percent, the credit union
may assume its current membership has
the same minority composition as the
HMDA data indicates. If a credit union
grants a majority of its mortgage loans
to minorities, it is likely the majority of
the community the credit union services
(its field of membership) will consist of
minorities.25
3. The credit union may elect to
collect data from members who
voluntarily choose to participate in such
collection about their racial identity and
use the data to determine minority
representation among the credit union’s
membership. The credit union should
consider using an unbiased third party
to conduct such a collection. For
example, data can be collected through
a survey of members assessing the
services they desire, or by mailed
electoral ballots for official positions.
Once collected, it is essential to
maintain the confidentiality of the data;
it should not be retained in the
members’ files or with any personal
identifiers, such as, names, accounts, or
Social Security numbers. If a majority of
its current members are minorities, it is
likely the majority of the community the
credit union services (its field of
membership) will consist of minorities.
4. The credit union may use any other
reasonable form of data, such as
membership address list analyses or an
employer’s demographic analysis of
employees.
A minority depository institution
credit union must assess whether it
continues to meet the required
definition of a minority depository
institution whenever there is a change
in its board of directors, or it makes a
significant change to its field of
membership, and update its
designation, if necessary, in the NCUA
Credit Union Profile. In accordance with
the regular examination process, the
NCUA will review whether a credit
union has updated its analysis and
made any corresponding changes to its
self-designation in the Credit Union
Profile. A minority depository
institution may elect to withdraw its
designation by not completing the
relevant questions in the Credit Union
Profile.
d. Monitoring and Reporting on
Minority Depository Institutions
The NCUA will monitor minority
depository institutions and report to
Congress annually on the number and
overall financial condition of minority
depository institutions, along with
25 HMDA data can be obtained from the Federal
Financial Institutions Examination Council website.
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actions taken by the agency to preserve
and strengthen them and to encourage
the chartering of new ones.26 The report
will also summarize the NCUA’s efforts
to obtain feedback from minority
depository institutions on the
effectiveness of the agency’s minority
depository institution support and
preservation activities. Additionally, the
NCUA maintains a list of minority
depository institutions on its website.
IV. Regulatory Procedures
Regulatory Flexibility Act
The RFA generally requires that when
an agency issues a proposed rule or a
final rule pursuant to the
Administrative Procedure Act or
another law, the agency must prepare a
regulatory flexibility analysis that meets
the requirements of the RFA and
publish such analysis in the Federal
Register. Specifically, the RFA normally
requires agencies to describe the impact
of a rulemaking on small entities by
providing a regulatory impact analysis.
For purposes of the RFA, the Board
considers credit unions with assets less
than $100 million to be small entities.27
A regulatory flexibility analysis is not
required, however, if the agency
certifies that the rule will not have a
significant economic impact on a
substantial number of small entities and
publishes its certification and a short,
explanatory statement in the Federal
Register together with the rule.
The Board fully considered the
potential economic impact of the
changes during the development of the
revised IRPS. The revised IRPS would
clarify the NCUA’s current policy on
minority depository institution
preservation and provide additional
services to minority depository
institutions. The revised IRPS would
not impose any new significant burden
on credit unions designated as minority
depository institutions and may provide
some additional resources. The
resources gained, however, are unlikely
to result in a significant economic
impact for affected credit unions. Small
credit unions are also not obligated to
participate in the minority depository
institution program. Accordingly, the
NCUA certifies that the revised IRPS
would not have a significant economic
impact on a substantial number of small
federally insured credit unions.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995
(PRA) applies to rulemakings in which
an agency creates a new information
collection or amends existing
26 12
U.S.C. 1463 note sec. (c).
80 FR 57512 (Sept. 24, 2015).
27 See
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information collection requirements.28
For purposes of the PRA, an information
collection requirement may take the
form of a reporting, recordkeeping, or a
third-party disclosure requirement. The
NCUA may not conduct or sponsor, and
the respondent is not required to
respond to, an information collection
unless it displays a valid Office of
Management and Budget (OMB) control
number. The current information
collection requirements for the minority
depository institution policy are
approved under OMB control number
3133–0195, Minority Depository
Institution Preservation Program.
This revision to IRPS 13–1 does not
alter the information collection
described under OMB control number
3133–0195, and the NCUA does not
anticipate an increase in the burden
based on the revisions. There are no
additional information collections
resulting from these changes.
Executive Order 13132
Executive Order 13132 encourages
independent regulatory agencies to
consider the impact of their actions on
state and local interests. The NCUA, an
independent regulatory agency as
defined in 44 U.S.C. 3502(5), voluntarily
complies with the Executive order to
adhere to fundamental federalism
principles. This revised IRPS will not
have a substantial direct effect on the
states, on the relationship between the
national government and the states, or
on the distribution of power and
responsibilities among the various
levels of government. Although statechartered credit unions are eligible to
obtain the minority depository
institution designation and receive
assistance based on it, the NCUA does
not believe this designation affects state
governments generally or state credit
union regulators in particular. The
NCUA will continue to work
cooperatively with state credit union
regulators to examine federally insured,
state-chartered credit unions and does
not expect the revised IRPS to alter
these relationships or allocation of
responsibilities. The decision about
whether to designate as a minority
depository institution or seek minority
depository institution program benefits
will be an individual business decision
for each credit union’s board. The
NCUA has determined that this revised
IRPS does not constitute a policy that
has federalism implications for
purposes of the executive order.
28 44
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U.S.C. 3507(d); 5 CFR part 1320.
26FEN1
Federal Register / Vol. 89, No. 38 / Monday, February 26, 2024 / Notices
Assessment of Federal Regulations and
Policies on Families
NATIONAL FOUNDATION ON THE
ARTS AND THE HUMANITIES
The NCUA has determined that these
revisions to IRPS 13–1 will not affect
family well-being within the meaning of
section 654 of the Treasury and General
Government Appropriations Act,
1999.29 The revisions to IRPS 13–1 may
increase the ability of minority
depository institutions to provide
financial services to families. However,
the Board does not have a means to
quantify how this might affect family
well-being as described in factors
included in the legislation, which
include the effects of the action on: the
stability and safety of the family;
parental authority and rights in the
education, supervision, and nurture of
their children; the ability of families to
support their functions or substitute
governmental activity for these
functions; and increases or decreases to
disposable income.
Institute of Museum and Library
Services
Small Business Regulatory Enforcement
Fairness Act—Congressional Review Act
The Congressional Review chapter of
the Small Business Regulatory
Enforcement Fairness Act of 1996
generally provides for congressional
review of agency rules.30 A reporting
requirement is triggered in instances
where the NCUA issues a final rule as
defined in the Administrative Procedure
Act.31 Besides being subject to
congressional oversight, an agency rule
may also be subject to a delayed
effective date if it is a ‘‘major rule.’’ The
NCUA does not believe this revised
IRPS is a ‘‘major rule’’ within the
meaning of the relevant sections of the
statute. As required by the statute, the
NCUA will submit this final IRPS to
OMB for it to determine if this final
IRPS is a ‘‘major rule’’ for purposes of
the statute. The NCUA also will file
appropriate reports with Congress and
the Government Accountability Office
so this rule may be reviewed.
By the National Credit Union
Administration Board on February 15, 2024.
Melane Conyers-Ausbrooks,
Secretary of the Board.
[FR Doc. 2024–03603 Filed 2–23–24; 8:45 am]
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BILLING CODE 7535–01–P
29 Public
Law 105–277, 112 Stat. 2681 (1998).
U.S.C. 551.
31 Id.
30 5
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Submission for OMB Review,
Comment Request, Proposed
Collection: Museums for All Program
Evaluation
Institute of Museum and
Library Services, National Foundation
on the Arts and the Humanities.
ACTION: Submission for OMB review,
request for comments, collection of
information.
AGENCY:
The Institute of Museum and
Library Services (IMLS) announces that
the following information collection has
been submitted to the Office of
Management and Budget (OMB) for
review and approval in accordance with
the Paperwork Reduction Act. This
program helps to ensure that requested
data can be provided in the desired
format, reporting burden (time and
financial resources) is minimized,
collection instruments are clearly
understood, and the impact of collection
requirements on respondents can be
properly assessed. This Notice proposes
the clearance of the Museums for All
Program Evaluation. A copy of the
proposed information collection request
can be obtained by contacting the
individual listed below in the FOR
FURTHER INFORMATION CONTACT section of
this Notice.
DATES: Written comments must be
submitted to the office listed in the
ADDRESSES section below on or before
March 24, 2024.
ADDRESSES: Written comments and
recommendations for proposed
information collection requests should
be sent within 30 days of publication of
this Notice to www.reginfo.gov/public/
do/PRAMain. Find this particular
information collection request by
selecting ‘‘Institute of Museum and
Library Services’’ under ‘‘Currently
Under Review;’’ then check ‘‘Only Show
ICR for Public Comment’’ checkbox.
Once you have found this information
collection request, select ‘‘Comment,’’
and enter or upload your comment and
information. Alternatively, please mail
your written comments to Office of
Information and Regulatory Affairs,
Attn.: OMB Desk Officer for Education,
Office of Management and Budget,
Room 10235, Washington, DC 20503, or
call (202) 395–7316.
OMB is particularly interested in
comments that help the agency to:
• Evaluate whether the proposed
collection of information is necessary
SUMMARY:
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14119
for the proper performance of the
functions of the agency, including
whether the information will have
practical utility;
• Evaluate the accuracy of the
agency’s estimate of the burden of the
proposed collection of information,
including the validity of the
methodology and assumptions used;
• Enhance the quality, utility, and
clarity of the information to be
collected; and
• Minimize the burden of the
collection of information on those who
are to respond, including through the
use of appropriate automated,
electronic, mechanical, or other
technological collection techniques or
other forms of information technology
(e.g., permitting electronic submission
of responses).
FOR FURTHER INFORMATION CONTACT:
Helen Wechsler, Supervisory Grants
Management Specialist, Office of
Museum Services, Institute of Museum
and Library Services, 955 L’Enfant Plaza
North SW, Suite 4000, Washington, DC
20024–2135. Ms. Wechsler can be
reached by Telephone: 202–653–4779,
or by email at hwechsler@imls.gov.
Persons who are deaf or hard of hearing
(TTY users) can contact IMLS at 202–
207–7858 via 711 for TTY-Based
Telecommunications Relay Service.
SUPPLEMENTARY INFORMATION: IMLS is
the primary source of Federal support
for the nation’s libraries and museums.
We advance, support, and empower
America’s museums, libraries, and
related organizations through grant
making, research, and policy
development. To learn more, visit
www.imls.gov.
Current Actions: This Notice proposes
the clearance of a program evaluation of
the IMLS Museums for All Initiative to
assess the impact of the program on
participating institutions. A current
IMLS cooperative agreement includes
an evaluation of the Museums for All
initiative, a program through which
participating institutions offer free or
reduced-price admission to families
facing financial need. As part of this
evaluation effort, a questionnaire, which
is the subject of this Notice, will be
undertaken to solicit information from
participating institutions in Museums
for All about the initiative’s
implementation, benefits, and areas for
improvement. A small number of
participating institution staff will be
interviewed virtually or in person as
part of case study research. These
information collections will be
developed based on what is needed to
undertake the evaluation. The
information IMLS collects will build on,
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]]>Agencies
[Federal Register Volume 89, Number 38 (Monday, February 26, 2024)]
[Notices]
[Pages 14113-14119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-03603]
=======================================================================
-----------------------------------------------------------------------
NATIONAL CREDIT UNION ADMINISTRATION
[NCUA-2023-0070]
Minority Depository Institution Preservation Program
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final interpretive ruling and policy statement.
-----------------------------------------------------------------------
SUMMARY: The NCUA Board is issuing revisions to Interpretive Ruling and
Policy Statement (IRPS) 13-1, regarding the Minority Depository
Institution Preservation Program for credit unions.
DATES: The revised IRPS is effective March 27, 2024.
FOR FURTHER INFORMATION CONTACT: Supervisory Program Manager Kristi
Kubista-Hovis or Program Manager Pamela Williams, Office of Credit
Union Resources and Expansion, 703-518-6610 or [email protected].
SUPPLEMENTARY INFORMATION
I. Background
Congress enacted the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 (FIRREA) in response to the savings and loan
industry crisis.\1\ FIRREA included provisions designed to encourage
federal financial regulators to preserve and promote minority
depository institutions.\2\ Specifically, FIRREA section 308 required
the Secretary of the Treasury to consult with the Office of Thrift
Supervision (OTS) and the Federal Deposit Insurance Corporation (FDIC)
on best methods to achieve the following goals:
---------------------------------------------------------------------------
\1\ Public Law 101-73, 103 Stat. 183 (1989).
\2\ Id. Title III, sec. 308, 103 Stat. 353, codified at 12
U.S.C. 1463 note, ``Preserving Minority Ownership of Minority
Financial Institutions.''
---------------------------------------------------------------------------
Preserving the number of minority depository institutions;
Preserving the minority character of a minority depository
institution involved in a merger or acquisition;
Providing technical assistance to prevent the insolvency
of minority depository institutions;
Encouraging the formation of new minority depository
institutions; and
Providing training, technical assistance, and educational
programs to minority depository institutions.\3\
---------------------------------------------------------------------------
\3\ Id. sec. (a). The Office of the Comptroller of the Currency
and the Board of Governors of the Federal Reserve System also
initiated minority depository institution programs to comply with
the spirit of FIRREA section 308, even though neither was originally
required to do so. OTS became part of the Office of the Comptroller
of the Currency on July 21, 2011.
---------------------------------------------------------------------------
Those agencies developed various initiatives aimed at preserving
federally insured banks and savings institutions that meet FIRREA's
definition of a minority depository institution.\4\
---------------------------------------------------------------------------
\4\ Id. sec. (b).
---------------------------------------------------------------------------
In 2010, Congress enacted the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act).\5\ Section 367(4)(A) of the
Dodd-Frank Act expanded FIRREA section 308 to require the Secretary of
the Treasury to consult with the National Credit Union Administration
(NCUA) and the Board of Governors of the Federal Reserve System, in
addition to the FDIC and the Office of the Comptroller of the Currency
on methods for best achieving the FIRREA goals.\6\ Section 367(4)(B) of
the Dodd-Frank Act also amended FIRREA section 308 to require each
agency to submit an annual report to Congress describing actions it has
taken to preserve and encourage minority depository institutions.\7\
---------------------------------------------------------------------------
\5\ Public Law 111-203, 124 Stat. 1376 (2010); 12 U.S.C. 5301 et
seq.
\6\ 12 U.S.C. 1463 note sec. (a).
\7\ Id. sec. (c).
---------------------------------------------------------------------------
In 2013, the NCUA Board (Board) proposed Interpretive Ruling and
Policy Statement (IRPS) 13-1 to establish a Minority Depository
Institution Preservation Program to encourage the preservation of
minority depository institutions and the establishment of new ones.\8\
In 2015, the Board approved final IRPS 13-1, establishing the
[[Page 14114]]
NCUA's Minority Depository Institution Preservation Program,
administered by the agency's Office of Minority and Women Inclusion
(OMWI).\9\ Consistent with the statutory language, IRPS 13-1 required
that for designation as an minority depository institution, the
majority of a credit union's members, the majority of its board, and
the majority of the ``community it services, as defined in its
charter'' must be eligible minorities. An eligible minority, under
FIRREA section 308, is any Black American, Asian American, Hispanic
American, or Native American.
---------------------------------------------------------------------------
\8\ 78 FR 46374 (July 31, 2013).
\9\ 80 FR 36356 (June 24, 2015).
---------------------------------------------------------------------------
The Board restructured the agency in 2018. Among other changes, the
restructuring created the Office of Credit Union Resources and
Expansion (CURE). At that time, CURE assumed administration of the
NCUA's Minority Depository Institution Preservation Program from OMWI.
In June 2023, the Board invited comment on proposed revisions to
IRPS 13-1.\10\ The proposed revisions included:
---------------------------------------------------------------------------
\10\ 88 FR 42105 (June 29, 2023).
---------------------------------------------------------------------------
Updating the administering office to CURE to reflect the
agency's current structure;
Clarifying that the meaning of ``community it services,''
means a credit union's field of membership;
Adding a reference to agency guidance to examiners
regarding supervision of minority depository institutions;
Clarifying the process for reviewing a minority depository
institution's designation status; and
Adding new subsection headings and expanding the
discussion of agency actions and policies in the areas of minority
depository institution engagement, technical assistance, examinations
of minority depository institutions, grants and loans, and training.
The Board invited comment on all aspects of the IRPS, including
suggestions for any other information or resources the agency could
provide to assist credit unions that are minority depository
institutions.
II. Summary of Comments on Proposed Changes to IRPS 13-1 and Final IRPS
The NCUA received five comments on the proposed changes. All
commenters were broadly supportive of minority depository institutions
and the NCUA's Minority Depository Institution Preservation Program.
Commenters noted that minority depository institution credit unions
provide important benefits to their communities, including by offering
services to those excluded from the mainstream financial system,
providing safe and affordable alternatives to predatory lenders, and
stimulating economic growth in the communities they serve. Most of the
commenters also had suggestions for changes to the IRPS and ways in
which the NCUA can better support minority depository institutions.
After considering the comments, as discussed below, the Board is
adopting the IRPS substantially as proposed.
One commenter requested that the NCUA extend or reopen the comment
period, stating that some stakeholders may have been unaware of the
proposed IRPS due to current industry and economic challenges. The
Board is not extending or reopening the comment period. The original
IRPS includes outdated references and the Board provided the standard
60 days for comments under NCUA rulemaking procedures.\11\ Further, the
comments received represented input from a variety of interested
parties. One letter, from a trade association focused on community
development and minority depository institution credit unions, had 42
co-signers, including 38 individual minority depository institution
credit unions, a national credit union trade association, a state
credit union trade association, and groups representing minority
depository institution credit unions and credit union professionals.
Another national trade association, a trade association for state
credit union regulators, and one state-level trade association also
submitted comments. Every commenter expressed support for the IRPS and
the mission and purpose of minority depository institutions.
Additionally, many minority depository institution credit unions are
members of one or more of the associations that submitted comments.
Considering the broad representation of credit union industry
perspectives among the commenters, the Board finds that the comment
period was adequate to ensure that it received sufficient feedback on
the proposal.
---------------------------------------------------------------------------
\11\ IRPS 87-2, as amended by IRPS 03-2 and IRPS 15-1, available
at https://ncua.gov/files/publications/irps/IRPS1987-2.pdf.
---------------------------------------------------------------------------
Another commenter requested that the NCUA amend the eligibility
standards so that credit unions that meet as few as one of the three
required criteria could become minority depository institutions,
instead of the requirement in the existing and proposed IRPS that all
three criteria be met. This commenter noted challenges in establishing
that a majority of ``the community it services'' is made up of
minorities. This change is not supported by the statute, which requires
that a mutual institution meet all three standards to become a minority
depository institution. The statute specifically requires that for a
mutual institution to qualify as a minority depository institution, a
majority of the board of directors, a majority of the account holders,
and a majority of ``the community which it services'' are
minorities.\12\ The Board's longstanding interpretation of the
statutory requirement is that credit unions are subject to the
requirements for mutual institutions.\13\
---------------------------------------------------------------------------
\12\ Title III, sec. 308, Public Law 101-73, 103 Stat. 353
(1989), as amended by title III, sec. 367(4), Public Law 111-203,
124 Stat. 1556 (2010), codified at 12 U.S.C. 1463 note.
\13\ 80 FR 36356, 36357 (June 24, 2015).
---------------------------------------------------------------------------
Similarly, another commenter requested an expansion of the minority
depository institution criteria to include all credit unions that
commit to minority depository institution principles, that have some
minority depository institution characteristics, or that have a
minority depository institution credit union merge into them. The Board
reiterates that the statute establishes the requirements for minority
depository institution designation and permitting differing eligibility
requirements would not comply with the statute.
Another commenter commended the NCUA for recognizing the uniqueness
of minority depository institutions and the need for a tailored
approach to examination and supervision of them. This commenter
recommended that the NCUA increase efforts to promote and support the
minority depository institution mentorship program and be proactive in
providing more resources to minority depository institutions, such as
regulatory updates, best practices, and opportunities for training.
Through CURE, the NCUA communicates opportunities and resources to
minority depository institution credit unions, such as through social
media and direct email. The NCUA offered a Minority Depository
Institution Mentoring Program from 2020-2022 in conjunction with the
then Minority Depository Institution Mentoring grant initiative.
Feedback from participating mentees and mentors was overall positive,
yet there was not sufficient participation to sustain the program. The
agency will continue to seek opportunities to support minority
depository institution credit unions and increase their awareness of
opportunities.
One commenter suggested the NCUA consider offering technical
assistance
[[Page 14115]]
funding support to very small minority depository institution credit
unions and minority depository institution credit unions that are
managing significant challenges, such as identified in their
examination reports. The Board notes that for the first time during
2023 a minority depository institution could receive Community
Development Revolving Loan Fund funding regardless of its low-income
designation status. Such funding may be used for technical assistance
in accordance with grant requirements. The NCUA's Small Credit Union
and Minority Depository Institution Support Program offers technical
assistance to address challenges such as those identified in their
examination reports. This assistance is provided at no additional cost
to participating credit unions.
Another commenter opined that it would be helpful if the agency
provided additional transparency around examination standards for
minority depository institution credit unions and explained how these
examination standards differ from standard procedures. While
examination standards for MDIs and non-MDI credit unions are the same,
the Board notes that the NCUA provides guidance for examiners to
consider the MDI's mission, unique characteristics, and tailored
strategies during an examination. This same commenter suggested
creating a group of examiners focused on small minority depository
institution credit unions and extending regulatory flexibility to all
small minority depository institution credit unions. These suggestions
go beyond the scope of the proposed revisions to the IRPS and were
provided to applicable NCUA offices to consider. During 2023, the NCUA
developed peer metrics in order for examiners to compare minority
depository institutions with minority depository institutions. The
agency also issued customized guidance to examiners to provide insights
into minority depository institutions' unique business models and
members' needs. The guidance assists examiners in understanding
minority depository institutions' distinct business model compared to
other mainstream financial institutions by providing instruction on how
to use minority depository institution peer metrics instead of
traditional peer metrics.
Commenters also requested the NCUA provide resources to minority
depository institution credit unions for specific purposes, such as
travel support to enable participation in the NCUA's in-person events,
access to an interactive analysis tool that would simplify the process
of determining whether an area meets the concentration of facilities
test, and additional information about how to track and store member
demographic data for purposes of minority depository institution
certification. These suggestions were provided to applicable NCUA
offices to consider.
Finally, one commenter requested that the NCUA consider supporting
the establishment of a fund similar to the Mission-Driven Bank
Fund.\14\ This commenter also encouraged the NCUA to advocate for more
inclusion of minority depository institution credit unions in
opportunities provided by the Economic Opportunity Coalition. As the
Economic Opportunity Coalition is established and funded by the private
sector, the Board believes it is not appropriate to take an advocacy
role with respect to this organization. The NCUA is researching the
feasibility of the establishment of a fund similar to the Mission-
Driven Bank Fund and will inform stakeholders of the outcome of the
research. It should be noted that the NCUA engages with other federal
agencies to educate them about credit unions, ensure access to
applicable resources, and to host webinars about resources they offer
minority depository institutions. Examples include engagement with the
Community Development Financial Institutions (CDFI) Fund concerning
changes to the requirements for CDFI certification, and engagement with
the U.S. Department of the Treasury to facilitate credit union access
to the Emergency Capital Investment Program. The NCUA will continue to
engage with other government entities to further support minority
depository institution credit unions, consistent with its mission and
statutory authorities.
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\14\ The Mission-Driven Bank Fund is an initiative of the
Federal Deposit Insurance Corporation developed for FDIC-insured
Minority Depository Institutions and Community Development Financial
Institutions.
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In summary, the Board appreciates the various suggestions from
commenters and, as noted above, will consider whether and how to
implement some of the suggestions. The final paragraph of the IRPS also
states that the NCUA's annual report to Congress will include a
discussion of the feedback it has solicited and received from minority
depository institution credit unions on the effectiveness of the
agency's minority depository institution support and preservation
activities. The Board believes that, should it determine to adopt some
of the suggestions, further changes to the IRPS would not be necessary.
After carefully considering the alternatives offered by these
commenters, the Board adopts the revisions to IRPS 13-1 as proposed,
with a few minor grammatical and stylistic changes and one correction.
The stylistic changes are that the final IRPS consistently uses the
phrase ``field of membership,'' (FOM) instead of the phrase ``potential
members'' that the proposed IRPS had carried over from the prior
version. This change makes the language of the entire IRPS consistent
with the clarification that ``community it services'' means FOM.
Additionally, the proposed IRPS mischaracterized the agency's
practice in stating that technical assistance is offered annually to
each minority depository institution credit union, and the final
version of the IRPS deletes this sentence. The Board emphasizes that
the change in the language of the IRPS does not change the availability
of technical assistance resources for minority depository institution
credit unions, including through the Community Development Revolving
Loan Fund's grants and loans and through the Small Credit Union and
Minority Depository Institution Support Program.
Authority: 12 U.S.C. 1463 note; Sec. 308, Pub. L. 101-73, 103 Stat.
353; as amended by Sec. 367(4), Pub. L. 111-203, 124 Stat. 1556.
III. Interpretive Ruling and Policy Statement 13-1, Minority Depository
Institution Preservation Program, as Amended
The text of IRPS 13-1 follows:
a. Goals and Objectives of the Minority Depository Institution
Preservation Program
Minority depository institutions play an important and unique role
in promoting the economic viability of minority and underserved
communities. Through its Minority Depository Institution Preservation
Program, the NCUA engages in a range of efforts to preserve minority
depository institutions and foster their success. The Minority
Depository Institution Preservation Program is designed to comply with
section 308 of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA), which requires the NCUA to submit an
annual report to Congress summarizing
[[Page 14116]]
its actions taken in furtherance of section 308's goals to: \15\
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\15\ Title III, sec. 308, Public Law 101-73, 103 Stat. 353
(1989), as amended by title III, sec. 367(4), Public Law 111-203,
124 Stat. 1556 (2010), codified at 12 U.S.C. 1463 note.
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Preserve the present number of minority depository
institutions;
Preserve the minority character of minority depository
institutions involved in mergers and acquisitions;
Provide technical assistance to prevent insolvency of
minority depository institutions that are not now insolvent;
Promote and encourage the creation of new minority
depository institutions; and
Provide training, technical assistance, and educational
programs for minority depository institutions.
b. Description of the Minority Depository Institution Preservation
Program
The NCUA's Minority Depository Institution Preservation Program
consists of proactive steps and outreach efforts to promote and
preserve minority depository institutions in the credit union system.
The NCUA's Office of Credit Union Resources and Expansion (CURE)
administers the agency's Minority Depository Institution Preservation
Program and will meet periodically with state regulators, other federal
regulators, and other stakeholders to discuss outreach efforts, share
ideas, and identify areas to work together to assist minority
depository institutions.
The NCUA offers minority depository institution-designated credit
unions a variety of initiatives to assist in preserving the economic
viability of their institutions. The initiatives include technical
assistance, educational opportunities, and funding. Examples of such
initiatives include the following:
Consulting and support programs;
Trainings; and
Grants and loans through the NCUA's Community Development
Revolving Loan Fund (CDRLF), subject to eligibility.\16\
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\16\ Prior to 2023, under the annual appropriations statutes,
grants and loans from the CDRLF were historically only available to
low-income designated credit unions, some of which are also minority
depository institutions. However, not all minority depository
institutions have a low-income designation.
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Examples of broad-based and individualized technical assistance
include the following:
Providing guidance in resolving examination concerns;
Helping minority depository institutions locate new
sponsors, mentors, or merger partners;
Assisting with field of membership expansions;
Supporting management in setting up new programs and
services;
Attempting to preserve the minority character of failing
institutions during the resolution process; and
Aiding groups that are interested in chartering a new
minority depository institution.
Engagement With Minority Depository Institutions
The NCUA's Minority Depository Institution Preservation Program
will provide periodic engagement with minority depository institutions
through interaction with headquarters and field staff. This interaction
includes:
sharing information and expertise on supervisory topics;
using various venues to engage in an open dialogue between
the NCUA, minority depository institutions, and related organizations;
seeking feedback on the NCUA's efforts under the Minority
Depository Institution Preservation Program; and
providing a variety of training opportunities hosted or
sponsored by the NCUA.
The NCUA's outreach also includes seeking out, working with, and
supporting groups interested in applying for a new federal or state
charter with a minority depository institution designation and aiding
existing credit unions interested in receiving the minority depository
institution designation.
Technical Assistance
The NCUA will provide technical assistance to a minority depository
institution upon request. A minority depository institution should
contact its assigned NCUA regional office, supervisory examiner, or
district examiner to request technical assistance.
Technical assistance is not an examination or supervisory activity
and will be provided separately from examination and supervision
contacts. Technical assistance includes, but is not limited to,
assistance in understanding applicable laws and regulations, agency
processes, reporting requirements, supervisory guidance, accounting
standards, supervisory findings and conclusions (only after the
conclusion of the applicable examination or supervision contact),
applications or requests for agency approval or action (such as field
of membership, bidding on a failing institution, regulatory waivers),
and assistance in designating as a minority depository institution. In
providing technical assistance, agency staff will not perform tasks
expected of an institution's management or employees. And while they
may help the institution understand how to apply or bid, agency staff
will not assist or guide the institution in developing the substance of
such application or bid.
Examinations of Minority Depository Institutions
Minority depository institution-designated credit unions have a
unique role in promoting the economic viability of minority and
underserved communities, at times necessitating distinct approaches to
taking and managing the related financial and operational risks. The
NCUA expects examiners to recognize the distinctive characteristics and
differences in core objectives of each financial institution and
consider these when evaluating the institution's financial and
operational condition and related management practices. Examiners will
evaluate a minority depository institution using, among other things,
peer metrics such as through the Financial Performance Report.
The NCUA provides examiners guidance to educate them about the
unique challenges faced by minority depository institutions and the
support and services the NCUA offers to help minority depository
institutions address such challenges. The guidance acknowledges, at
times, some minority depository institutions may need more or different
support from the NCUA than other credit unions. The guidance also lists
specific types of technical assistance a minority depository
institution may request of the NCUA. It also advises that minority
depository institutions often have unique memberships and provide
financial services to consumers and businesses in communities that
might not otherwise have access to another federally insured financial
institution. Therefore, the policies, processes, risks, and practices
of minority depository institutions may vary and comparison to other
credit unions based solely on similar size may have limited value.
Instead, examiners are instructed to assess each minority depository
institution based on its unique strategy and membership.
CDRLF Grants and Loans
The CDRLF provides loans and grants to low-income designated credit
unions, some of which are also designated as minority depository
institutions, to expand outreach to underserved populations, improve
digital services and cybersecurity, provide staff training, and support
capacity-building programs, as examples. The
[[Page 14117]]
Consolidated Appropriations Act for fiscal year 2023 made minority
depository institutions without the low-income designation eligible for
CDRLF grants and loans through September 30, 2024.\17\
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\17\ Div. E, title V, Public Law 117-328, 136 Stat. 4690 (2022).
Refer to the Grants and Loans section of the NCUA website for
eligibility requirements in future periods.
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Training and Education
The NCUA offers training to credit unions including minority
depository institutions, through various formats such as webinars,
online courses, videos, and in-person events. Through the NCUA Learning
Management System, the agency offers training and educational resources
to credit union board members, management, employees, and volunteers
online and at no charge. Examples of the content provided include
guidance on credit union operations, compliance, community
partnerships, and strategic planning.\18\
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\18\ These training opportunities are accessible to all credit
unions through the Learning section of the NCUA's website.
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Preservation of Minority Depository Institutions
With regard to a potentially failing minority depository
institution or the need for an assisted merger of a minority depository
institution, as with any insured credit union, the Board will consider
providing section 208 assistance under the Federal Credit Union Act to
reduce the risk or avert a threatened loss to the National Credit Union
Share Insurance Fund (NCUSIF), facilitate a merger or consolidation, or
to prevent the closing of a credit union that the Board determines is
in danger of closing.\19\ Requirements concerning field of membership
apply to most mergers. In addition, the NCUA must consider resolution
costs and safety and soundness implications for all mergers.
---------------------------------------------------------------------------
\19\ 12 U.S.C. 1788(a)(1)-(2).
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The NCUA will make every effort to preserve the minority character
of failing minority depository institutions during the resolution
process. In the event of the potential failure of an minority
depository institution, the agency will contact minority depository
institutions in the NCUA's merger registry that qualify to bid on a
particular failing institution. Agency staff will solicit interest in
bidding on the failing minority depository institution and offer
technical assistance to any minority depository institution desiring to
bid. The NCUA will also provide minority depository institutions
interested in submitting a bid with an additional two weeks to submit a
bid whenever possible. Except in the cases of conservatorships,
liquidations, or assisted mergers, the minority depository
institution's board of directors is generally the decision-maker on a
merger partner provided the selection is consistent with regulatory and
safety and soundness standards. For conservatorships, liquidations, or
assisted mergers, in the selection process, the NCUA will consider all
the requirements applicable to a merger or purchase and assumption,
including FIRREA's general preference guidelines.\20\
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\20\ Generally, the NCUA is involved in the selection process
when the transaction will cause a loss to the NCUSIF or when the
failing credit union is in conservatorship and the NCUA Board is the
conservator. For additional information on the NCUA's selection
process, see Letter to Credit Unions 10-CU-11, Information on NCUA's
Merger and Purchase & Assumption Process.
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c. Minority Depository Institution Designation Eligibility
The agency adopted the definition of a minority depository
institution in FIRREA section 308 that applies to a mutual
institution.\21\ Accordingly, a credit union is eligible to receive the
minority depository institution designation if it meets all the
following criteria:
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\21\ 12 U.S.C. 1463 note sec. (b)(1)(C).
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A majority of its current members are from any of the
eligible minority groups;
A majority of the members of its board of directors are
from any of the eligible minority groups; and
A majority of the community it services, as designated in
its field of membership, are from any of the eligible minority groups.
For minority representation to be a ``majority,'' it must be
greater than 50 percent.
The NCUA relies on the FIRREA section 308 ``minority'' definition
to identify an eligible minority as any Black American, Asian American,
Hispanic American, or Native American.\22\ For the purpose of this
IRPS, Asian American includes anyone who is Native Hawaiian or Other
Pacific Islander, and Native American includes anyone who is American
Indian or Alaska Native. Also, for the purpose of minority
representation under the minority depository institution definition, an
individual who falls into more than one of the minority categories will
be considered as a single, eligible minority.
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\22\ Id.
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A credit union that meets the eligibility requirements can self-
designate as a minority depository institution by following the
guidelines as specified on the NCUA's website. The instructions to the
NCUA's Credit Union Profile form, which credit unions use to self-
designate as a minority depository institution, contain detailed
directions on how to make the designation.\23\ A minority depository
institution may participate in the NCUA's Minority Depository
Institution Preservation Program subject to the eligibility
requirements of any specific initiative. An eligible credit union's
decision to designate as a minority depository institution or to
participate in the Minority Depository Institution Preservation Program
is voluntary.
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\23\ NCUA Form 4501A, https://ncua.gov/files/publications/regulations/credit-union-profile-form-instructions-4501A-sept-2022.pdf.
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A credit union defined as a ``small credit union'' by the NCUA
under the Regulatory Flexibility Act (RFA) may self-designate greater
than 50 percent representation among its current members, and within
the community it services (field of membership), based solely on
knowledge of those members. Under the RFA, the NCUA currently defines a
small credit union as a credit union with total assets of less than
$100 million.\24\
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\24\ 80 FR 57512 (Sept. 24, 2015).
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A credit union not defined as a small credit union by the NCUA may
rely on one of the following methods, as applicable, to determine the
minority composition of its current membership exclusively and of the
community it services. The credit union must maintain documentation
supporting its minority depository institution self-designation.
1. The credit union may ascertain the minority representation using
demographic data from the U.S. Census Bureau website, based on the
area(s) where the current membership or field of membership resides,
such as a township, borough, city, county, or Metropolitan Statistical
Area. If the U.S. Census data--for example, census tracts, zip codes,
townships, boroughs, cities, or counties--shows the area's population
comprises mostly eligible minorities, the credit union may assume that
its current membership and the community it services each have the same
minority composition as the Census data indicates.
2. The credit union may use Home Mortgage Disclosure Act (HMDA)
data to calculate the reported number of minority mortgage applicants
divided by the total number of mortgage applicants within the credit
union's membership. If the share of minority
[[Page 14118]]
representation among applicants is greater than 50 percent, the credit
union may assume its current membership has the same minority
composition as the HMDA data indicates. If a credit union grants a
majority of its mortgage loans to minorities, it is likely the majority
of the community the credit union services (its field of membership)
will consist of minorities.\25\
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\25\ HMDA data can be obtained from the Federal Financial
Institutions Examination Council website.
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3. The credit union may elect to collect data from members who
voluntarily choose to participate in such collection about their racial
identity and use the data to determine minority representation among
the credit union's membership. The credit union should consider using
an unbiased third party to conduct such a collection. For example, data
can be collected through a survey of members assessing the services
they desire, or by mailed electoral ballots for official positions.
Once collected, it is essential to maintain the confidentiality of the
data; it should not be retained in the members' files or with any
personal identifiers, such as, names, accounts, or Social Security
numbers. If a majority of its current members are minorities, it is
likely the majority of the community the credit union services (its
field of membership) will consist of minorities.
4. The credit union may use any other reasonable form of data, such
as membership address list analyses or an employer's demographic
analysis of employees.
A minority depository institution credit union must assess whether
it continues to meet the required definition of a minority depository
institution whenever there is a change in its board of directors, or it
makes a significant change to its field of membership, and update its
designation, if necessary, in the NCUA Credit Union Profile. In
accordance with the regular examination process, the NCUA will review
whether a credit union has updated its analysis and made any
corresponding changes to its self-designation in the Credit Union
Profile. A minority depository institution may elect to withdraw its
designation by not completing the relevant questions in the Credit
Union Profile.
d. Monitoring and Reporting on Minority Depository Institutions
The NCUA will monitor minority depository institutions and report
to Congress annually on the number and overall financial condition of
minority depository institutions, along with actions taken by the
agency to preserve and strengthen them and to encourage the chartering
of new ones.\26\ The report will also summarize the NCUA's efforts to
obtain feedback from minority depository institutions on the
effectiveness of the agency's minority depository institution support
and preservation activities. Additionally, the NCUA maintains a list of
minority depository institutions on its website.
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\26\ 12 U.S.C. 1463 note sec. (c).
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IV. Regulatory Procedures
Regulatory Flexibility Act
The RFA generally requires that when an agency issues a proposed
rule or a final rule pursuant to the Administrative Procedure Act or
another law, the agency must prepare a regulatory flexibility analysis
that meets the requirements of the RFA and publish such analysis in the
Federal Register. Specifically, the RFA normally requires agencies to
describe the impact of a rulemaking on small entities by providing a
regulatory impact analysis. For purposes of the RFA, the Board
considers credit unions with assets less than $100 million to be small
entities.\27\ A regulatory flexibility analysis is not required,
however, if the agency certifies that the rule will not have a
significant economic impact on a substantial number of small entities
and publishes its certification and a short, explanatory statement in
the Federal Register together with the rule.
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\27\ See 80 FR 57512 (Sept. 24, 2015).
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The Board fully considered the potential economic impact of the
changes during the development of the revised IRPS. The revised IRPS
would clarify the NCUA's current policy on minority depository
institution preservation and provide additional services to minority
depository institutions. The revised IRPS would not impose any new
significant burden on credit unions designated as minority depository
institutions and may provide some additional resources. The resources
gained, however, are unlikely to result in a significant economic
impact for affected credit unions. Small credit unions are also not
obligated to participate in the minority depository institution
program. Accordingly, the NCUA certifies that the revised IRPS would
not have a significant economic impact on a substantial number of small
federally insured credit unions.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in
which an agency creates a new information collection or amends existing
information collection requirements.\28\ For purposes of the PRA, an
information collection requirement may take the form of a reporting,
recordkeeping, or a third-party disclosure requirement. The NCUA may
not conduct or sponsor, and the respondent is not required to respond
to, an information collection unless it displays a valid Office of
Management and Budget (OMB) control number. The current information
collection requirements for the minority depository institution policy
are approved under OMB control number 3133-0195, Minority Depository
Institution Preservation Program.
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\28\ 44 U.S.C. 3507(d); 5 CFR part 1320.
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This revision to IRPS 13-1 does not alter the information
collection described under OMB control number 3133-0195, and the NCUA
does not anticipate an increase in the burden based on the revisions.
There are no additional information collections resulting from these
changes.
Executive Order 13132
Executive Order 13132 encourages independent regulatory agencies to
consider the impact of their actions on state and local interests. The
NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5),
voluntarily complies with the Executive order to adhere to fundamental
federalism principles. This revised IRPS will not have a substantial
direct effect on the states, on the relationship between the national
government and the states, or on the distribution of power and
responsibilities among the various levels of government. Although
state-chartered credit unions are eligible to obtain the minority
depository institution designation and receive assistance based on it,
the NCUA does not believe this designation affects state governments
generally or state credit union regulators in particular. The NCUA will
continue to work cooperatively with state credit union regulators to
examine federally insured, state-chartered credit unions and does not
expect the revised IRPS to alter these relationships or allocation of
responsibilities. The decision about whether to designate as a minority
depository institution or seek minority depository institution program
benefits will be an individual business decision for each credit
union's board. The NCUA has determined that this revised IRPS does not
constitute a policy that has federalism implications for purposes of
the executive order.
[[Page 14119]]
Assessment of Federal Regulations and Policies on Families
The NCUA has determined that these revisions to IRPS 13-1 will not
affect family well-being within the meaning of section 654 of the
Treasury and General Government Appropriations Act, 1999.\29\ The
revisions to IRPS 13-1 may increase the ability of minority depository
institutions to provide financial services to families. However, the
Board does not have a means to quantify how this might affect family
well-being as described in factors included in the legislation, which
include the effects of the action on: the stability and safety of the
family; parental authority and rights in the education, supervision,
and nurture of their children; the ability of families to support their
functions or substitute governmental activity for these functions; and
increases or decreases to disposable income.
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\29\ Public Law 105-277, 112 Stat. 2681 (1998).
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Small Business Regulatory Enforcement Fairness Act--Congressional
Review Act
The Congressional Review chapter of the Small Business Regulatory
Enforcement Fairness Act of 1996 generally provides for congressional
review of agency rules.\30\ A reporting requirement is triggered in
instances where the NCUA issues a final rule as defined in the
Administrative Procedure Act.\31\ Besides being subject to
congressional oversight, an agency rule may also be subject to a
delayed effective date if it is a ``major rule.'' The NCUA does not
believe this revised IRPS is a ``major rule'' within the meaning of the
relevant sections of the statute. As required by the statute, the NCUA
will submit this final IRPS to OMB for it to determine if this final
IRPS is a ``major rule'' for purposes of the statute. The NCUA also
will file appropriate reports with Congress and the Government
Accountability Office so this rule may be reviewed.
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\30\ 5 U.S.C. 551.
\31\ Id.
By the National Credit Union Administration Board on February
15, 2024.
Melane Conyers-Ausbrooks,
Secretary of the Board.
[FR Doc. 2024-03603 Filed 2-23-24; 8:45 am]
BILLING CODE 7535-01-P
