Letter to Credit Unions No.: 16-CU-12
Risk Based Examination Scheduling Policy
December 2016

NCUA announced changes to its exam and supervision program effective January 1, 2017. The changes were recommended by NCUA’s Exam Flexibility Initiative Report, released in October.

Federally Insured State-Chartered Credit Unions – FISCUs meeting any of the following 3 criteria will receive NCUA insurance reviews that will begin between 8 and 12 months from the prior examination completion date:

  • Assets greater than $1 billion
  • Composite NCUA CAMEL code 4 or 5 with assets greater than $50 million
  • Composite NCUA CAMEL code 3 with assets greater than $250 million

All other FISCUs will receive an NCUA exam based on risk, and at least once every 5 years. NCUA will make every effort to coordinate its insurance reviews with the FISCU’s SSA.

NCUA has also formed a joint working group with NASCUS and SSAs to evaluate and recommend further changes to NCUA’s FISCU exam program. The working group will consider ways to improve coordination of joint exams, reduce unnecessary redundancy between NCUA and SSAs; and evaluate the feasibility of adopting an alternating exam program for FISCUs.

Federal Credit Unions – FCUs may be eligible for an extended exam cycle. An FCU is eligible for an extended exam cycle if it meets ALL of the following criteria:

  • Assets less than $1 billion
  • Both composite and management component CAMEL code 1 or 2
  • “Well capitalized” under prompt corrective action (PCA) regulations
  • No outstanding DORs related to significant recordkeeping deficiencies
  • Not operating under any enforcement or administrative order (i.e. cease and desist order (C&D), letter of understanding and agreement (LUA), preliminary warning letter (PWL), or a PCA directive

Examinations for FCUs meeting these eligibility requirements will begin between 14 and 20 months from the completion date of their last exam. Examinations for all other FCUs will begin between 8 and 12 months from the prior examination completion date.

NCUA notes that otherwise eligible small FCUs with limited segregation of duties may receive more frequent examinations on a random sample basis. This reflects NCUA’s enhanced emphasis on fraud detection. For FCUs with less than $30 million in assets, NCUA will use its Small Credit Union Examination Procedures.

Back to NASCUS Regulatory Affairs