ARLINGTON, Va.—The FDIC Board Thursday approved an interim final rule allowing an 18-month examination cycle for qualified community banks and thrifts with less than $1 billion in assets.
Comptroller of the Currency Thomas Curry said an identical interim rule is in place for OCC-supervised banks.
Following the moves, NAFCU President and CEO Dan Berger renewed the trade association’s call for 18-month examination cycles for well-run credit unions.
“Given the recent FDIC and OCC actions to allow certain bankers an 18-month exam cycle, NAFCU again calls upon the NCUA to lengthen the exam cycle for healthy, well-run credit unions,” Berger wrote in a letter to NCUA board members. “Credit unions did not cause the financial crisis, are in extremely sound shape as an industry, and do not need the additional burden of more frequent exams.
“Lengthening the cycle will also save NCUA resources for credit unions that are facing challenges and need more oversight,” continued Berger. “We appreciate that the NCUA has indicated as recently as (Thursday) that the agency is open to an 18-month exam cycle, but we urge the agency to approve this much-needed relief for credit unions as soon as possible.”
At Thursday’s NCUA open board meeting Chairman Debbie Matz stated the agency may consider returning to an 18-month exam cycle for low-risk CUs. NCUA Board Member Mark McWatters in November stated his support for an 18-month cycle.
The moves by the FDIC and OCC leave credit unions as the only federally regulated depository institution subject to a strict, 12-month exam cycle at the federal level.
NAFCU and CUNA have strongly advocated for the return to an 18-month exam cycle for low-risk credit unions.
The OCC and FDIC have had an 18-month exam cycle in place for some time. Previously, the asset-size threshold for the 18-month exam cycle was $500 million, but that was raised under legislation passed in December as part of the 2016 highway funding bill. That bill also included NAFCU-sought privacy notice and some qualified-mortgage relief for credit unions.
Curry said the 18-month exam cycle eases the burden on well-managed institutions and allows regulators to focus their resources “on those institutions that need it most—those that present capital, managerial, or other issues of significant supervisory concern.” He added, “We don’t have unlimited supervisory resources, and it’s important that we manage those resources wisely.”