The NCUA and six state credit union regulators will be launching an alternating exam pilot program for a specific group of federally insured, state-chartered credit unions during the next year, the NCUA announced Dec. 12. The pilot program will operate for one full alternating cycle, which will be about three years.
The foundation for the project is the NCUA 2016 Exam Flexibility Initiative report. The purpose of the initiative is to help NCUA and state regulators evaluate how an alternating examination process might improve coordination and most efficiently use federal and state funds.
The pilot will test three examination approaches:
- Alternating lead. In this program, the NCUA and state regulators will conduct joint examinations, alternating which agency serves as the lead.
- Alternating with limited participation. In this test, the NCUA will alternate conducting examination with some involvement from the other agency.
- In this pilot, the NCUA and state regulators will alternate conducting examinations entirely.
The NCUA announced that it will collaborate with six participating state regulators including the 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.
The state examiners and NCUA have selected the credit unions who will be participating.
“It’s exciting to see the state of Florida involved in an innovative program that involves collaboration for the good of financial institutions nationwide,” said LSCU President/CEO Patrick La Pine. “The LSCU is supportive of any efforts to reduce regulatory burdens on our credit unions, and this program has the potential to do exactly that. We look forward to seeing the results of this alternating exam program, which should greatly improve efficiencies and positively impact credit union membership.”