Collaboration with states part of NCUA 2017-21 plan;
calendar-year examination requirement ends

July 21, 2016 -- Collaboration with state regulatory agencies, and the end of a calendar-year exam requirement for federally insured credit unions, are two outcomes of the NCUA Board’s adoption Thursday of its strategic plan for 2017-21 during its monthly open meeting in Alexandria, Va.

The new strategic plan lists as one of the strategies for the agency (specifically, under Strategic Objective 1; “Ensure a Safe and Sound Credit Union System”) to “collaborate with federal regulatory agencies and state regulators as appropriate to maintain a safe and sound regulatory environment.” Similarly, under Strategic Objective 2 (“Promote Consumer Protection and Financial Literacy”), to collaborate with federal and state regulators to “protect consumers using credit union products and services.”

Additionally, with the adoption of the strategic plan, the board effectively “retired” a performance goal of requiring exams each calendar year of all FISCUs with more than $250 million in assets, and every federal credit union. But NCUA Board Chairman Rick Metsger, in commenting on the change, underscored that it does not extend the exam cycle (to 18 months, for example). “How and whether we further change the exam cycle will be determined by the Board after we have received recommendations from the Exam Flexibility Initiative,” Metsger said.

In May, Metsger established an internal NCUA working group (“the Exam Flexibility Initiative”) to obtain stakeholder feedback and evaluate the agency’s examination and supervision program; a group of five state regulators are providing input to the group. The Board expects to receive recommendations from the working group in September.

In other action, the board:

  • Heard the results of a mid-year budget review, in which NCUA CFO Rendell Jones reported that no reduction in the FCU operating fee rate is recommended (at least at this time) for 2017. However, later in his comments, Jones noted that, rather than make an adjustment to the future operating fee now, staff will review cash needs and make a final determination later in the year. Jones estimated that the agency projects to spend $2.7 million less than it budgeted for 2016.
  • Reviewed the second quarter National Credit Union Share Insurance Fund results – which show the equity ratio of the fund at 1.24% (estimated to rise to 1.27% after adjusted 1% deposits are collected in October). The agency noted, however, that “the ratio may differ if loss patterns change.” Additionally, the results show the percentage of CAMEL code 4/5 shares to total insured shares rose in the second quarter from 0.78% vs. 0.85%. As of June 30, 11 federally insured credit unions had failed; in all of 2015, 16 failed.


NCUA strategic plan, 2017-21

NCUSIF 2nd quarter 2016 report

NCUA Exam Flexibility Initiative

Press release on Exam Flex Initiative