Federal, state CU regulators to launch 3-year program assessing alternating state/federal exams

A test program in which federal and state regulators will test approaches for alternating examinations of federally insured, state-chartered credit unions (FISCUs) starts Jan. 1 and will continue for three years, state and federal regulators announced this week.

Under the program, three alternating exam program approaches will be tested:

  • Alternating lead: state regulators and the National Credit Union Administration (NCUA) conduct joint examinations of FISCUs, alternating which agency serves as lead each cycle.
  • Alternating with limited participation: NCUA and state regulators alternate conducting examinations with some involvement from the other agency.
  • Alternating: state regulators and NCUA alternate conducting examinations independently.

The test will involve six state regulators and the federal agency with a select group of FISCUs, according to NCUA and the professional association for state credit union regulators, the National Association of State Credit Union Supervisors (NASCUS). The pilot program is based on recommendations of NCUA’s 2016 Exam Flexibility Initiative Report which recommended, among other things, enhanced coordination of exams for FISCUs between state and federal supervisors, and establishment of joint federal-state supervisor working group.

The program will run for one full alternating cycle, approximately three years, the federal agency said in a release. “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,” NCUA said.

The working group was made up of representatives from NASCUS, several state regulators, and NCUA and 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.

State regulators participating in the test are scheduled to include: 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.

NCUA, State Regulators Launching Alternating Examination Pilot Program Jan. 1

2016 NCUA Exam Flexibility Initiative Report