Credit Union Practices flashcards
Credit Union Practices · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Field of Membership
- The common bond that defines who may join a credit union: occupational, associational, or geographic. Federal credit unions must have NCUA-approved field of membership.
- Supervisory Committee
- A mandatory committee that oversees internal controls, audits, and member accounts. It reports to the board and members, ensuring accountability.
- Net Worth Ratio
- Net worth divided by total assets. Used for prompt corrective action; 7% or higher is well-capitalized for credit unions.
- Share Draft Account
- A credit union checking account that pays dividends and allows drafts (checks). It is insured by NCUA up to $250,000.
- Regulation CC Holds
- Rules governing funds availability. Next-day items include cash, wires, and government checks; local checks generally available within two business days.
- Regulation E Provisional Credit
- For debit card disputes, credit unions must provide provisional credit within 10 business days while investigating, unless the matter is resolved sooner.
- Truth in Savings Act
- Regulation DD requires disclosure of dividend rates, annual percentage yield, fees, and minimum balances before opening an account.
- Loan-to-Value Ratio
- Loan amount divided by appraised value of collateral. Higher LTV indicates greater risk; many credit unions set maximum LTV limits.
- Debt-to-Income Ratio
- Total monthly debt payments divided by gross monthly income. Used to assess borrower capacity; often capped at 40-45%.
- Adverse Action Notice
- Required under Regulation B when credit is denied. Must be provided within 30 days and include reasons for denial.
- Member Business Loan Limit
- NCUA limits member business loans to the lesser of 1.75 times net worth or 15% of total assets, with some exceptions.
- Share Insurance Amount
- NCUA insures shares up to $250,000 per depositor, per credit union, per ownership category. Joint accounts receive $250,000 per co-owner.
- Revocable Trust Coverage
- Share insurance for revocable trusts is based on each beneficiary's interest, up to $250,000 per beneficiary, per owner.
- Currency Transaction Report
- A report filed with FinCEN for cash transactions over $10,000 in a single business day. Required under the Bank Secrecy Act.
- Suspicious Activity Report
- Filed with FinCEN when suspicious transactions are detected. Generally due within 30 days; no threshold for insider abuse.
- Customer Identification Program
- BSA requirement to collect name, date of birth, address, and identification number before opening an account.
- OFAC Screening
- Checking members against the Specially Designated Nationals list. Blocked transactions must be reported within 10 business days.
- Net Interest Margin
- Net interest income divided by average earning assets. Measures how efficiently a credit union earns from its assets.
- Return on Assets
- Net income divided by average total assets. Indicates profitability; a benchmark for credit unions is 1% or higher.
- Interest Rate Risk Gap
- The difference between rate-sensitive assets and rate-sensitive liabilities. Positive gap means assets reprice faster than liabilities.
- CECL Allowance
- Current Expected Credit Losses model estimates lifetime credit losses on loans, using historical data and economic forecasts.
- Liquidity Ratio
- Liquid assets divided by total assets. Indicates ability to meet short-term obligations; NCUA expects adequate liquidity.
- Segregation of Duties
- Internal control principle that separates authorization, custody, and record-keeping to reduce fraud risk.
- Dual Control
- Requiring two people to complete a transaction or access a secure area, such as vaults or wire transfers, to prevent fraud.
- COSO Framework
- Internal control framework with five components: control environment, risk assessment, control activities, information and communication, and monitoring.
- Bank Secrecy Act
- Federal law requiring financial institutions to assist government agencies in detecting money laundering and other financial crimes.
- Regulation P Privacy Notice
- Requires credit unions to provide initial and annual privacy notices and allow members to opt out of certain information sharing.
- Prompt Corrective Action
- NCUA framework that classifies credit unions by net worth ratio and mandates corrective actions for undercapitalized institutions.
- Dormant Account
- An account with no member-initiated activity for 12 months. Funds may escheat to the state after a defined period.
- Stop Payment Order
- A member's request to halt payment on a check or ACH transaction. Written confirmation may be required within 14 days.
- Home Mortgage Disclosure Act
- Requires mortgage lenders to collect and report loan data, including applicant demographics and loan purpose, to detect discriminatory lending.
- Servicemembers Civil Relief Act
- Provides protections for military members, including a 6% interest rate cap on pre-service debts upon written notice.