Final Rule Summary

NCUA 12 CFR Part 791, Definition of Small Credit Union/ IRPS 15-1

Prepared by NASCUS Legislative & Regulatory Affairs Department
October, 2015

NCUA is amending Interpretive Ruling and Policy Statement (IRPS) 87–2 (as amended by IRPS 03–2 and 13–1) to increase the asset threshold used to define the term ‘‘small entity’’ under the Regulatory Flexibility Act (RFA) from $50 million to $100 million in assets.

DATES: The final rule and IRPS 15-1 are effective November 23, 2015. You may read the final rule and IRPS 15-1 here.


The RFA generally requires federal agencies to determine and consider the impact of proposed and final rules on small entities. NCUA’s new final rule and IRPS will define a small credit union for RFA purposes as a FICU with less than $100 million in assets, amending § 791.8(a) governing NCUA’s procedures for developing regulations. As a result of the change, an additional 733 small FICUs will be given special consideration of the economic impact of proposed and final regulations, bringing the total number of FICUs covered by the RFA to approximately 4,690.

The final rule retains the 3-year review cycle.

Under the RFA, if a proposed or final rule would have a significant economic impact on a substantial number of small entities, the federal agencies must engage in a small entity impact analysis, known as an initial regulatory flexibility analysis (IRFA) for proposed rules and a final regulatory flexibility analysis (FRFA) for final rules. If an agency determines that a proposed or final rule will not have a ‘‘significant economic impact on a substantial number of small entities,’’ the agency may certify as much in the Federal Register and forego the IRFA and FRFA.

NCUA explains its decision to establish $100 million as the benchmark by citing several metrics that it says demonstrates credit unions under $100 million are disadvantaged compared to credits union greater than $100 million or otherwise support the $100million benchmark:

  • The $100 million threshold results in a similar institution coverage ratio as the RFA threshold the FDIC uses in relation to banks.
  • The $100 million threshold covers a greater percentage of FICU assets, compared to the percentage of bank assets covered by the banking agencies’ $550 million threshold.
  • FICUs below $100 million in assets trail their peers in: • deposit growth rates; • asset growth rates; membership growth rates; • loan origination growth rates; • inflation-adjusted average loan amounts; • ratio of operating costs to assets; • merger and liquidation trends; • average year-to-date loan amounts; • non-interest expenses per dollar loaned; • average assets per full-time employee; and • average non-interest expense per annual loan originations.
  • Despite representing 83 percent of all FICUs, FICUs with less than $100 million in assets experienced 93 percent of mergers and liquidations since 2004.


Changing the definition of small credit union does not affect existing NCUA rules regarding liquidity funding (§741.12) or interest rate risk (§741.3(b)(5)). Those rules contain reduced expectations, or outright exceptions, for credit unions under $50 million in assets. The rules however do not reference “small credit unions” but rather specify the asset ranges in the rule text. NCUA will not change those asset thresholds at this time. Likewise, NCUA will proceed with its rulemaking related to risk-based capital (RBC) and the definition of complex credit union independently from this proposed change to the definition of small credit union.