ALEXANDRIA, Va.– NCUA said effective with the new year it will pilot a program with six state regulators in which it will launch alternating examinations for a select group of federally insured, state-chartered credit unions.
Under the plan, in some cases the state-chartered credit union will be examined by either the state regulator or NCUA, but not both in the same year.
The six participating state regulators include the California Department of Business Oversight, the Florida Division of Financial Institutions, the New Hampshire Banking Department, the Oklahoma State Banking Department, the South Carolina Office of the Commissioner of Banking, and the Texas Credit Union Department.
According to NCUA, the pilot will evaluate three alternating examination program approaches:
- Alternating Lead: The NCUA and state regulators conduct joint examinations of federally insured, state-chartered credit unions, alternating which agency serves as lead each cycle.
- Alternating With Limited Participation: the NCUA and state regulators alternate conducting examinations with some involvement from the other agency.
- Alternating: The NCUA and state regulators alternate conducting examinations independently.
The pilot program, based on recommendations in the 2016 Exam Flexibility Initiative report, will run for one full alternating cycle, approximately three years, NCUA said. “It will help the NCUA and state regulators determine how an alternating examination program could improve coordination and make the best use of federal and state resources,” the agency said.
NCUA said the pilot program is the result of ongoing work by a joint NCUA-State Supervisor working group comprised of representatives from the NCUA, several state regulators, and the National Association of State Credit Union Supervisors. The working group studies ways to improve supervisory efficiencies, maintain a sound supervisory program, and reduce the burden on federally insured, state-chartered credit unions, according to NCUA.
'Thrilled About Launch'
“We have found the State Supervisor-NCUA working group to be extremely productive and are thrilled about the upcoming launch of the pilot,” said NASCUS President and CEO Lucy Ito in a statement. “Alternating examinations have the potential to reduce supervisory burdens on credit unions, diminish the wear and tear of examiners’ road time, and preserve limited agency budgets. NASCUS applauds the participating state supervisory agencies and NCUA for their willingness to test a new approach that could positively impact both federally insured, state-chartered credit unions and the agencies that supervise them.”
NCUA has posted frequently asked questions about the pilot program on its website. Additional information specific to each state’s program will be available in the near future, NCUA said.