Agency continues offsite exam program, but signals that exam reports will once more be issued

The federal credit union regulator is continuing its offsite exam and supervision work as a result of the coronavirus crisis but expects to return to issuing examination reports, according to a second letter to credit unions (LTCU 20-CU-17) issued this week by the agency. Changes in the letter take effect June 1.

According to the letter from the National Credit Union Administration (NCUA), the agency’s offsite policy for all workers and contracted support staff will remain in effect until further notice. “However, the NCUA may conduct onsite work at a credit union if necessary to address serious or time-sensitive matters,” it said.

NCUA said that, generally, credit unions will not be required to provide information to conduct offsite work. However, more information can mean less time in the future with examiners. “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 said.

Further, the agency said its regional offices will continue to coordinate with state supervisory authorities on examination and supervision efforts for federally insured, state-chartered credit unions.

Since March 16 (when the policy was first announced), NCUA said it had conducted offsite examination work at more than 100 credit unions (median asset size: of $56 million). The agency said, however, that both credit union staff and examiners “have also noted that completing an examination offsite may take longer than an onsite examination.”

Examination reports, the agency said, would be issued for exams completed offsite. However, NCUA said it acknowledged that credit unions need to focus on providing service to their members. “Any corrective actions issued to a credit union will consider the impact of the COVID-19 pandemic on the credit union’s operations and financial condition, and will be prioritized appropriately,” the agency said.

The agency said it would not criticize credit union efforts to provide prudent relief for members during the pandemic. “However, examiners will consider whether such efforts elevate, or reduce, a credit union’s risk exposure. If a credit union has taken on additional risk, even if done prudently, this may be reflected in the credit union’s applicable CAMEL and risk ratings,” the NCUA said.

The agency added that it has instituted an “enhanced internal review” process for all exam reports, and advised credit unions to work with examiners and supervisory examiners if they require flexibility in meeting deadlines or have concerns about exam reports.

NCUA LTCU 20-CU-17: Update to Offsite Examination and Supervision Approach

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