NCUA shelves onsite exams indefinitely

The National Credit Union Administration won’t be back in branches anytime soon. The agency on Thursday announced that new onsite examinations have been paused indefinitely.

In a letter to credit unions on Thursday, the regulator said it would “not schedule onsite examination work until further notice.” Additionally, employees will continue to work remotely also “until further notice.”

NCUA has been completing exams remotely since March 16, when the coronavirus halted most travel in the U.S. and forced employers to come up with work-from-home options for their staff.

Since then, the regulator has completed offsite exam work at more than 100 credit unions with a median asset size of $56 million, the letter said. Reports will be issued for exams completed offsite, and any problems that need to be addressed will be considered in light of COVID-19.

“At most of these credit unions, NCUA staff were able to perform substantial examination procedures and complete the examination,” according to the letter, signed by Chairman Rodney Hood.

NCUA staff is continuing to be careful not to burden employees at credit unions with requests right now, the letter said and institutions aren’t generally required to provide information for an offsite exam. But “the more information a credit union can provide for offsite reviews, the more likely the NCUA will not have to return to the credit union until the next examination cycle,” the agency added.

Examiners will take into consideration an institution’s efforts to provide relief for members and will review whether this has increased or reduced the credit union’s potential risk. If these measures increased an institution’s risk, it could affect its CAMEL and risk ratings, even if it was prudent, the letter said.

Earlier this week the agency announced changes to second-quarter call reports so those filings better reflect how credit unions are working with members through the pandemic.

Even before the coronavirus pandemic, NCUA had been working to complete more of its exams offsite. It previously piloted a remote exam program, and last year adopted best practice guidelines based on that effort.

However, it’s not expected that virtual exams will completely replace onsite work.

“While the NCUA can conduct the majority of examination work offsite, there remain a few areas that are difficult to complete offsite,” according to the letter. “Credit union staff and examiners have also noted that completing an examination offsite may take longer than an onsite examination.”