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New NCUA Definition of 'Small' Means Relief for More CUs
Wednesday, September 23, 2015 6:40 AM

More than three-quarters of all federally insured credit unions will be classified as small entities under the final rule (Part 791) and interpretive ruling and policy statement (IRPS 15-1) approved by the NCUA board last week.

The board’s action raises the asset ceiling for a “small” credit union from $50 million to $100 million under the Regulatory Flexibility Act. The change makes an additional 733 federally insured credit unions eligible for special consideration of regulatory relief in future rulemakings and assistance from NCUA’s Office of Small Credit Union Initiatives, including training and consulting. In all, 4,690 federally insured credit unions will be classified as small.

“The asset ceiling for small credit unions is now 10 times higher than when I became chairman in 2009 and 100 times higher than when I first joined the board in 2002,” NCUA Board Chair Debbie Matz said. “When I returned to the board, CEOs of small credit unions told me the definition hadn’t kept pace with credit union trends, so updating this definition became part of my Regulatory Modernization Initiative.”

Matz said the board considered even higher thresholds, as some advocated, but determined they would be difficult to justify with economic data.

“In today’s credit union system, an asset threshold above $100 million is the logical floor for complex credit unions, and our data analysis shows a threshold under $100 million meets the modern definition of a small credit union,” Matz said. “If we had chosen the same small entity threshold of $550 million as the banking industry is required by law to do, we would have created five times the asset exposure to the National Credit Union Share Insurance Fund.”

In approving the $100 million asset ceiling, the NCUA Board analyzed a wide range of metrics, including growth rates for assets, deposits, loans, and membership; the ratio of operating costs to assets; and merger and liquidation rates.

The final rule, available online here, will become effective 60 days after publication in the Federal Register. Pursuant to the agency’s rolling three-year regulatory review, the NCUA Board will reconsider the small credit union threshold in 2018.