ARLINGTON, Va. -- The National Credit Union Administration Board voted unanimously Thursday to approve a strategic plan that reduces the regulatory burden on CUs by removing the calendar year examination requirement.
"The agency's new strategic plan prioritizes continual quality improvement to make our operations both more efficient and effective, rather than the adoption of new rules and regulations," NCUA Board Chairman Rick Metsger said. "We will focus on upgrading our technology, systems and processes to improve the quality of our examinations and supervision, while simultaneously reducing the onsite burden on credit unions and improving the quality of life for our examiners."
The 2017-21 strategic plan is part of the regulator's overall efforts to modernize the examination process.
In adopting the plan, the Board got rid of two agency performance goals requiring the examination each calendar year of all federally insured, state-chartered credit unions with more than $250 million in assets and every federal credit union. The CU regulator also established an interim goal of completing an efficient and effective federal and state examination process through the end of this year.
"This change will give our regional offices greater flexibility to schedule exams when they are needed, and when they make the most sense, rather than basing them on an arbitrary calendar-year requirement," Metsger said.
Under the plan, exams for federal CUs do not have to be conducted every calendar year. The time between exams, however, may not exceed 23 months.
"This change alone does not extend the examination cycle," Metsger added. "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."
Exam Changes a Year in the Making
Finalizing these changes to the exam cycle is the result of nearly a year of efforts by the Credit Union National Association, the National Association of Federal Credit Unions and many state leagues,
In May, he established an internal working group known as the Exam Flexibility Initiative to obtain stakeholder feedback and evaluate the regulator's examination and supervision program. Formal recommendations from the working group are expected in September.
Budget Goals
The regulator also said that it is on track to meet its 2016 budget goals for fiscal year 2016 and finish the year with a $2.7 million reduction in expected spending.
NCUA has a $290.9 million budget for fiscal year 2016 that ends Sept. 30.
"The bottom line is that the agency continues to be a good steward of its funds," said Metsger. "We never stop looking for ways to economize and continue to be leader in the field of budget transparency," he added.
Board Member J. Mark McWatters reminded the audience that he has dissented on previous budgets because of "less than robust amount of transparency."
But now NCUA is putting budget data online so CU officials and members can see how much the agency is spending on personnel, contracted services, administrative services and more.
"We have made a lot of progress on transparency," McWatters said at the board meeting, urging CU supporters to visit NCUA's website and to review the budget information online.
He also urged CU community to participate in NCUA's 2016 Mid-Year Budget Review that is slated for October.
"We want to learn from the community" and get comments and feedback on budget. "Please respond, show up, that would be helpful." he added.
Also at the meeting, NCUA Chief Financial Officer Rendell Jones said that despite a second-quarter loss of $21.2 million, the Share Insurance Fund has still earned $2.2 million during the first half of 2016. But increased deposits and declining investment returns continue to put downward pressure on the equity ratio, so Jones said the agency will not be declaring a premium any time soon.
"However, any large losses resulting from unexpected credit union failures could result in the need for a premium," he added.
