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NAFCU's Carrie Hunt yesterday welcomed the prospect of action soon at NCUA to eliminate the strict calendar-year exam cycle and reiterated the need to make an extended exam cycle a high priority.

NCUA Board Chairman Rick Metsger, during an open board meeting discussion covering call report modernization and the exam cycle, said he hopes to see the calendar-year exam cycle addressed in a strategic plan update this summer. He said the board could vote by July 2 to eliminate strict calendar-year exams for all federal credit unions and for federally insured state-chartered credit unions with more than $250 million in assets.

"I am hopeful to have the final strategic plan vote by July 2 to limit the calendar year requirement and put those building blocks in place so we can execute this the next exam cycle," Metsger said after a discussion with NCUA Office of Examination and Insurance Director Larry Fazio and other staff.

Hunt, NAFCU's executive vice president of government affairs and general counsel, said the comments were encouraging. "NAFCU appreciates the board's transparent and thoughtful review of the call report and an extended examination cycle," she said. "We are particularly encouraged by Chairman Metsger's plan to make better use of technology to modernize the examination process and decrease the regulatory burden on credit unions. However, we continue to urge the board to make extending the examination cycle a high priority. We look forward to working with the agency on this critical matter."

NAFCU has long urged NCUA to return healthy credit unions to a longer exam cycle, both to save NCUA resources and to relieve credit unions of the burden of more-frequent exams. Credit unions are the only federally regulated depository institutions held strictly to a calendar-year cycle for examinations.

During Thursday's open meeting discussion, Fazio suggested to Metsger and Board Member Mark McWatters that technology will replace traditional exam cycles with more frequent and targeted discussions during which specialized examiners can evaluate credit unions' risks, policies and procedures from off-site. "Is one big-bang examination event every 12 or 18 months really the best way to supervise in this day and age?" Fazio asked.

Fazio also suggested revamping call reports to make them more individualized to different credit unions' needs, in the way that programs like TurboTax show users only the relevant schedules they need.