CUNA Comment Letter

Comments on Proposed Rule Section 741.6 - Call Reports

November 21, 2005

Ms. Mary Rupp
Secretary of the Board
National Credit Union Administration
1775 Duke Street
Alexandria, Virginia 22314-3428

Dear Ms. Rupp:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on a proposed rule regarding the upcoming changes in the Financial and Statistical Report, also known as the Call Reports or 5300 Reports. The new changes will require all federally insured credit unions to file the same quarterly Call Report. The abbreviated report currently filed in the first and third quarters by credit unions with assets less than ten million dollars will be eliminated. CUNA represents approximately 90 percent of our nation’s nearly 8,700 federal and state-chartered credit unions, which serve nearly 87 million members.

Summary of CUNA’s Comments

The proposed rule will require all federally insured credit unions to file the same quarterly Call Report form, which has now been revised. The revised Form 5300 consolidates information, reduces the number of schedules, and is designed to be easier to read and used. NCUA plans to begin using the new form in September 2006. Currently, all federally insured credit unions file a quarterly Call Report, although credit unions with less than ten million dollars in assets have the option of filing a short form in the first and third quarters.

NCUA believes this new form will provide the following benefits for credit unions:

CUNA has discussed these changes with a number of smaller credit unions. These credit unions generally agree that while these changes may increase the paperwork burden to some extent, the filing of the revised Call Reports on a quarterly period will not be significantly more burdensome than filing the current Call Reports, along with the abbreviated reports in the first and third quarters. For this reason, CUNA supports the proposal to use one Call Report for all credit unions as this will improve overall efficiency and reduce costs for NCUA, make comparisons easier between credit unions of all sizes, improve NCUA’s quarterly trend analysis, simplify maintenance of the 5300 reporting system, and improve the accuracy of the information that is collected.

CUNA supports NCUA’s ongoing process to streamline the Call Reports as much as possible and agrees that these draft revisions represent an improvement. However, CUNA believes NCUA could significantly reduce the compliance burden even further, with little or no loss of information it needs, by making the following changes:

There are also a number of examples of information requested on the Call Report that a credit union could provide once, instead of providing the information each quarter. One example is noted above regarding the request as to whether each credit union offers electronic cash, account aggregation, and other electronic services. For this type of information, the credit union should only be required to provide this information at the time these services are first provided, unless there is a change from the previous quarter. There are numerous examples throughout the entire Call Report in which this approach could apply.

Overall, we encourage NCUA to continue streamlining the form so that it focuses on the essential information necessary to effectively regulate credit unions. CUNA would welcome the opportunity to work with NCUA in this effort.

Smaller credit unions have expressed concern with the response reports that they have received from NCUA, especially those credit unions that have reported activities that are not commonly reported. One example is when more mortgages are sold than are kept by the credit union. NCUA has requested that the credit union review this information multiple times, even though the credit union adequately explained that the information is reported in this manner because it does not hold long-term mortgages.

Also, since the revised Call Report may impose additional paperwork burden on credit unions, small credit unions will need time to prepare the additional data and all credit unions, regardless of assets, should be given sufficient time before the use of the new Form 5300 is required. The new Form 5300 is substantially different than the current form, and credit unions will need time to become familiar with the revised format.

If the new form is approved and made available to all credit unions before the end of 2005, then CUNA would support NCUA’s proposed implementation date of September 2006. If the new form is not approved by them, then the use of the new Form 5300 should not be required prior to the first quarter of 2007.

Thank you for the opportunity to comment on the proposal regarding the upcoming changes to the Call Reports. If Board members or agency staff have questions about our comments, please contact Senior Vice President and Associate General Counsel Mary Dunn or me at (202) 638-5777.

Sincerely,

Jeffrey Bloch
Senior Assistant General Counsel