NCUA Eyes $100M Small Credit Union Cap

CU Times

WASHINGTON — The NCUA board will consider a proposal to raise the definition of a small credit union from assets under $50 million to assets under $100 million at the Feb. 19 board meeting.

”Increasing the threshold from $50 million to $100 million would provide special consideration for regulatory relief for an additional 745 credit unions in future rulemakings,” Larry Fazio, director of the NCUA Office of Examination and Insurance, said Tuesday at a Senate Banking Committee hearing on regulatory relief for small financial institutions.

If the threshold increase is approved, the NCUA estimated that hundreds of additional credit unions would fall under the definition of a small entity.

“Should the board adopt a $100 million threshold, 77% of all credit unions would be covered in future considerations of regulatory relief,” Fazio said in his written testimony. “Taking this action also would recognize the challenges encountered by credit unions below $100 million in assets, which have slower deposit growth rates, slower membership growth rates, and higher operating costs than peer credit unions above the threshold.”

Fazio recommended some field of membership changes that Congress should consider.

“Allowing federal credit unions that have a community or single common-bond charter the opportunity to add underserved areas would open up access for many more unbanked and under banked households to credit union membership,” Fazio said in his written testimony.

“This legislative change could also eventually enable more credit unions to participate in the programs offered through the congressionally established Community Development Financial Institutions Fund, thus increasing the availability of credit and savings options in distressed areas,” he added.

Fazio also said Congress could allow federal credit unions to serve underserved areas without requiring those areas to be local communities.

“NCUA stands ready to work with the Committee on these ideas as well as other options for adjusting field of membership requirements,” he said.