ARLINGTON, Va.—NCUA's push over the last few years to reduce the number of CUs that file late call reports has borne fruit, but now the agency is facing a bit of pushback on the issue.
The Cooperative Credit Union Association (CCUA), a trade organization that represents more than 180 credit unions in Massachusetts, New Hampshire and Rhode Island, recently pointed out an error in an NCUA directive related to filing call reports. Specifically, CCUA had to assure its member credit unions that the latest NCUA Call report deadline was actually Jan. 22, and not Jan. 21, as an email from NCUA had wrongly stated. (NCUA subsequently corrected the date).
While that was a small mistake, CCUA president Paul Gentile said it highlighted a bigger problem—that is, the overall Call Report timetable should be re-evaluated as it poses some obstacles and disadvantages for credit unions.
"If you take a look at recent NCUA Call Report deadlines, they are in some cases considerably compressed when compared to banks," Gentile said. "The Oct. 23 Call Report deadline [for third quarter 2015] was a full seven calendar days shorter than [for] banks. The current Jan. 22nd deadline is a full eight calendar days before banks are required to file with the [Federal Deposit Insurance Corp.] FDIC."
Gentile added that when one considers that Jan. 1 [New Year's Day] and Jan. 18 [Martin Luther King] were holidays, that leaves just 14 working days for the credit unions to submit their Call Reports. "Certainly that compressed time-frame creates quite a challenge for smaller credit unions," he said.
Gentile suggested that to alleviate this issue, NCUA should move away from its current "floating" Call Report system and adopt a program in line with the bank regulator process of 30 calendar days from month-end so that credit unions have "consistency on expectations and more time to file."
"Why should the banks have a longer time to file their Call Report," Gentile asked during an interview with Credit Union Journal.
Currently, credit unions can face fines of up to $1 million a day for filing late. Though late-filer fines have been well below that dollar amount to date, NCUA Chairman Debbie Matz has characterized late filings as "a serious problem." Indeed, during the third-quarter 2013 reporting cycle, more than 1,000 federally- insured credit unions, of all asset sizes, filed their reports late, which Matz said can impact the agency's ability to conduct effective off-site supervision and delays the release of quarterly industry data to the general public.
"Credit unions are taking the agency's focus on [penalties] seriously, but it would be productive to have some more air, or at least consistency, in the Call Report deadlines, especially in months where the calendar can be heavily impacted by holidays," Gentile stated.
Since NCUA cracked down on late filers, the number of late call reports have fallen dramatically—from as many as 1,744 for the fourth quarter of 2012 to only 36 in the fourth quarter of 2014 and just 28 for the second quarter of 2015.
"NCUA's encouragement to credit unions to file on time, coupled with efforts by the Office of Small Credit Union Initiatives to help credit unions get their reports in on time, has had a significant impact," said NCUA Public Affairs Specialist John Fairbanks.
The agency is expected to release the list of late filers for the most recent batch of call reports Wednesday.
Dennis Dollar, a former NCUA chairman and now credit union consultant in Alabama, said the number of late filers has gone consistently down with NCUA's increased emphasis. "I'm not sure it is the threat of fines as much as it is that the credit unions with a late filing history are beginning to see that NCUA is making this an agency priority," he commented. "From my experience, they should make it a priority because, in actuality, a regulatory agency maps its entire supervision strategy and resource allocation from the data filed quarterly by the institutions it regulates."
Despite the threat of high fines, NCUA noted that the median penalty for second quarter 2015 late-filers was just $185. The highest individual fine levied amounted to $20,000. The agency also sends out reminders to credit unions, Fairbanks added.
Dollar noted that the threat of "extremely heavy" fines are perhaps a bit of "overkill" and that some consideration should be given to credit unions with limited resources so a day-late filing doesn't bring about thousands of dollars of fines, the "reality is that late filings make it difficult for a regulatory agency to determine where its examination hours should go and what they should be looking for when they go into a credit union."
NCUA further indicated that smaller credit unions tend to form the bulk of late filers. For the second quarter of 2015, all but one of the 14 credit unions who agreed to late filing penalties had assets under $50 million, and 11 of those were under $10 million.
But John McKechnie, a senior partner at Total Spectrum and a former NCUA official, does not think late filing is a big issue in the credit union landscape.
He said that from what he has heard directly from credit unions, the timely filing of Call Reports "hasn't been, and shouldn't be a problem."
"And I have yet to run across anyone who thinks NCUA shouldn't enforce the deadlines," he added. "Also, [credit union] leagues have been particularly diligent in reaching out to credit unions in their states to aid in compliance."
