Texas Credit Union Commission Meeting Results

On Friday, March 11, the Texas Credit Union Commission met at the Texas Credit Union Department (TCUD) building in Austin. The following is a summary of the meeting. 

TCUD Fiscal Year 2022 Budget and Financial Performance 

• No Action Taken. 
• In 2020, the Commission adopted the strategic plan for fiscal years 2021-2025. 
• The FY 2022 budget was approved by the Commission in June 2021, which includes the maintenance and operating budget and capital improvement budget in support of the strategic plan. 
• At the end of January 2022, total expenditures where less than budgeted projections. Below-budget items predominately represent travel-related savings due to the pandemic and personnel savings due to vacancies. 

Approve the General Budget Assumptions and Parameters to be used In Guiding the Development of the Department’s FY 2023 Budget 

• The Commission adopted the proposed budget assumptions and parameters for fiscal year 2023 as recommended by staff. 
• These guidelines will assist staff in developing the FY 2023 budget to present at the summer meeting. 
• The assumptions include a balanced budget, contractual obligations, compliance, strategic plan initiatives, salary and benefits, merit increases, retiree insurance costs, inflation, statewide indirect costs, commission travel, internal audit services, electronic document management system, improvements to the building, NASCUS dues and accreditation fees, overnight travel stipend, examiners’ laptops and support, and legal research tools. 

Department’s Strategic Plan for FY 2023 to FY 2027 

• The Commission approved the draft strategic plan for TCUD for the fiscal years 2023–2027 and authorized its submission. 
• The four strategic goals for 2023–2027 are to: 
• Ensure a safe and sound state credit union system in Texas; 
• Provide a flexible regulatory framework that enables credit unions to provide a full competitive array of financial services; 
• Safeguard the interests of credit union members; and 
• Develop a professional and motivated staff that provides quality service to the citizens of Texas and supports achievement of TCUD’s statutory mission. 
• Executive management also considered the results of the 2021 Employee Engagement Survey, including job satisfaction and pay. 

Department Survey of Employee Engagement 

• No Action Taken. 
• TCUD provided a survey to employees seeking feedback on 12 constructs, including: workgroup, strategic, supervision, workplace, community, information systems, internal communication, pay, benefits, employee development, job satisfaction, and employee engagement. 
• Performance improved from the previous biennial survey in all categories except employee development, which remained unchanged. 
• Primary friction points provided by staff included lack of travel stipends (due to remote work during the pandemic), unsupported costs of working remotely, difficulties in achieving training venues, and quality of life due to current staffing levels. 

Commission Policy Manual Updates 72: (1) Weapons Policy, (2) Legal Counsel (XIV), (3) Formatting Changes 

• The Commission reviewed the revised policy manual and approved the proposed changes. 
• The policies were updated to address recent changes in Texas law regarding the open carry of handguns, the new general counsel position, and formatting issues. 

Status of the State Credit Union System 

• No Action Taken. 
• Overall, the financial performance of Texas credit unions was excellent during 2021. 
• Capital strength was sound, with earnings and asset quality performance ratios reaching their strongest levels over the last seven years. 
• Earnings performance data for Texas credit unions reflects that strong net income performance is strengthening net worth ratios. 
• Absent any unforeseen stimulus payments, it is anticipated that deposit and asset growth will be controlled at a modest-to-moderate level during 2022 and will result in further enhancement of net worth positions for Texas charters. 
• At the end of 2021, there were 175 Texas state-chartered credit unions, down one from the prior year. Twenty credit unions (four less than the prior year) reported net operating losses of $3.33 million; the remaining 155 credit unions reported aggregate net income of $579.74 million. Twenty-two credit unions were assigned a CAMELS rating of 3 or higher and are monitored through a combination of off-site monitoring, regular on-site or remote contacts, and ongoing review for compliance. 

Audit Committee Report – Chair Jim Minge: (1) Discussion, Consideration, and Potential Action of Internal Auditing Services Contract 140; (2) Annual Internal Risk Assessment Report 

The Commission voted to extend the request for proposal deadline for additional time to review bids prior to awarding an internal auditor contract. 

Commissioner Evaluation Committee Report – Chair Karyn Brownlee: Consideration of Report and Recommendations Related to the Commissioner’s FY 2022 Performance Review Plan 

• The Commissioner Evaluation Committee recommended that the Commission accept the Committee’s report and approve the Commissioner Performance Review Plan. 
• Session closed to the public. No details available. 

Rulemaking Matters 

(1) Adoption of the Rule Review of 7 TAC, Part 6, Chapter 91, Subchapter G (Lending Powers) and Readoption of Rules 

• The Commission adopted the rule review because the reasons for these rules continue to exist. 
• The Texas Government Code requires a state agency to review and consider for readoption each rule not later than the fourth anniversary of the date on which the rule took effect and every four years after. The agency must consider whether the reason for adopting the rule(s) continue to exist.

(2) Proposed Amendments to 7 TAC, Part 8, Chapter 91.720 (Small-Dollar, Short-Term Credit) 

• The Commission approved for publication and comment the proposed amendments to 7 TAC 91.720, Small-Dollar, Short-Term Credit. 
• The proposed amendments to 7 TAC 91.720(b) increase the defined maximum for small-dollar, short-term credit loans to $2,000 (from $1,000) and extended maximum maturity to 12 months (from six months). 
• The amendments to the rule permit Texas credit unions to be more competitive in the marketplace to help steer consumers away from predatory payday lenders. 
• The amendments adjust for inflation the maximum lending limit. The $1,000 limit found in (b) was established in 2010 and has not since been adjusted. 
• The maximum lending limit and maturity found within the current rule is less than maximum maturities of similar loan products authorized for federal credit unions under the Payday Alternative Loans program authorized by the National Credit Union Administration.   
  

(3) Adoption of Proposed Amendments to 7 TAC, Part 8, Chapter 153 (Home Equity Lending) 

• The Commission approved for publication and comment the amendments to 7 TAC Part 8, Chapter 153, Home Equity Lending. 
• The proposed amendments clarify the definition of "business day" and make technical corrections. 
• Home Equity rules are administered by the Joint Financial Regulatory Agencies consisting of the Texas Department of Banking, Department of Savings and Mortgage Lending, Office of Consumer Credit Commissioner, and the Texas Credit Union Department. 

Litigation Update Regarding Pending Litigation: Credit Union Department v. Ken Paxton, Attorney General of Texas; Cause No. D-1-GN-21-007168 

• No Action Taken. 
• Session closed to the public. 
• The litigation is related to a Texas Public Information Act request where TCUD believes certain requested information to be confidential while the Attorney General’s office disagrees. 

Future Commission Meetings: Agenda Items, Arrangements, and Dates 

The next regular meeting of the Commission is scheduled for June 10, 2022. 

Questions?