WASHINGTON (3/11/15)--A breakout session featuring a discussion of National Credit Union Administration examinations at CUNA's Governmental Affairs Conference Tuesday brought out some key information about agency priorities for 2015.
|Larry Fazio, director of the NCUA's Office of Examination and Insurance (left), explains agency examination priorities for 2015. Fazio was on a panel that included Ken Ross (right), executive vice president/chief operating officer of the Michigan Credit Union League. (CUNA Photo)|
Larry Fazio, director of the NCUA's Office of Examination and Insurance, highlighted some of the agency's efforts to improve the federal examination process.
Fazio noted that areas of focus during examinations in 2015 will include:
The agency has recently completed a number of exam initiatives, including restoring the annual exam cycles for federal credit unions and larger federally insured, state-chartered credit unions--cutting it back from 18 months; developing a National Supervision Policy Manual; and decreasing the amount of time an examiner spends with a smaller credit union during the exam process.
"Over the last several years, we've been looking to reallocate time from examining smaller credit unions to the larger, more sophisticated credit unions," Fazio said. "In addition to just scaling down the time, we've actually re-engineered the techniques we use on credit unions, and we've been rolling those out during the first quarter of this year. By the end of this month we'll have trained all our examiners, so if you're a small credit union, up to $50 million in assets, you'll see this new exam program."
Smaller credit unions will see the scope of their exams narrowed down to record keeping, internal controls, fraud red flags and lending. Fazio said these are the issues that tend to challenge some smaller credit unions.
He gave several examples of information that could warrant closer scrutiny from examiners.
"If your credit union is introducing new products, or experiencing very rapid growth in certain product areas, that historically correlates to a problem, so that's a red flag examiners will look at," Fazio said. "Not that there's anything wrong with adding new products or having great growth, we just want to be sure it's controlled, and if you're doing a new product that you've thought it through."
Tom Renz, president/chief development officer at Commodore Perry FCU, Oak Harbor, Ohio, participated in the panel and shared his thoughts on the process. Commodore Perry FCU was at the center of a well-known examination appeal that eventually went all the way to the NCUA board, before it was withdrawn.
Commodore Perry's efforts to address what the credit union considered a significant problem with its examination were hailed by the credit union system.
"We have to recognize, as well as the NCUA, that both sides have legitimate concerns related to this issue. The process isn't perfect, and I don't think the NCUA would argue that it is," Renz said, later adding, "we don't want frivolous appeals; we want real, legitimate appeals. This is something we all pay for."
(For more coverage of Tuesday's GAC breakout sessions, see related News Now stories: On tax reform, anything is in play; Card data security tech not quite enough; and CUs layout FOM rule wish list to NCUA.)