TDRs may not finance unpaid interest and fees, but do allow credit unions to include third-party fees, such as insurance or property taxes.

The NCUA removed a proposed TDR provision that would have imposed an aggregate limit for loan workouts based upon a percentage of net worth. Instead, the final rule includes additional reporting requirements that will focus on the credit union's restructuring practices and how they increase collectability.

The new rule also requires credit unions to increase TDR reporting to volunteers, and supporting documentation must be made available to examiners.

Credit unions must place loans into nonaccrual status if principal or interest has been in default for 90 days or more, unless the loan is well secured, or if the loan is maintained on a cash basis and full payment is not expected.

Loans may return to accrual status if the past due status is less than 90 days, GAAP does not require it to be maintained on a cash or cost recovery basis, and repayment within a reasonable period is assured.

Member business loans, however, were given a different set of accrual status requirements: MBL nonaccrual status must be maintained until the credit union can document the borrower's financial condition and prospects for repayment, which would include a minimum of six consecutive timely payments.

New rules extending regulatory flexibility standards to all credit unions were also passed. Nonmember deposit flexibility, while extended to all credit unions, lost a standardized cap exemption. While credit unions can apply to their NCUA regional director for an exemption, the rule sets a threshold that cannot exceed 20% of the credit union's total shares.

Other RegFlex provisions granted to all credit unions include a six-year time frame to partially occupy unimproved land for future expansion, the ability to purchase zero-coupon investments, and the ability to engage in borrowing repurchase transactions with mismatched maturities.

Private label mortgage-backed securities are also now allowed for all credit unions, although well capitalized institutions have fewer restrictions.

Chief Financial Officer Mary Ann Woodson presented quarterly financial reports for the share insurance fund and corporate fund, which largely remained unchanged from December 2011 reporting.

CAMEL ratings improved across the board during the first quarter. Woodson told Board Member Gigi Hyland she expects the share insurance fund's equity ratio to end the year around 1.30%, slightly lower than the first quarter's 1.32% figure.