ALEXANDRIA, Va. (10/5/15)--The National Credit Union’s (NCUA's) fixed-assets final rule is effective as of Oct. 2, and the agency has provided several pieces of guidance for credit unions. In a supervisory letter (SL-15-03), the NCUA’s Office of Examination and Insurance provides information for agency field staff, while a letter to credit unions (15-CU-06) provides information on examination priorities.
The fixed-assets rule was finalized by the NCUA in July. It removed the 5% cap on fixed assets and established a six-year time period of partial occupancy of premises. CUNA generally supported the proposal, but urged the NCUA to provide guidance.
The final rule also eliminated existing and pending waivers of the 5% limit on fixed assets. Waivers associated with other parts of the rule, such as the occupancy requirements, remain in effect.
According to its letter to federally insured credit unions, examiners will no longer focus on fixed assets, unless any of the following conditions occur:
“In these exceptional cases, NCUA examiners will focus on whether the credit union can afford the level of fixed assets in which it has invested,” the letter reads.
Should the above conditions occur, examiners will review the following areas:
The supervisory letter also provides information about the effect fixed assets may have on a credit union’s earnings and net worth, and establishes a consistent framework for the examination and supervision processes used to review credit union management of fixed assets. It also addresses the occupancy and prohibited transaction provisions that remain in the rule.