Newsroom

August 17, 2017

Economic Monitor: NCUA exam improvements still needed

Credit unions reported that the time between their last two NCUA examinations increased slightly from 11.4 months in 2016 to 12.4 months in 2017, according to NAFCU's latest Economic & CU Monitor survey report released to members Thursday. However, improvements in the NCUA's exam process are still needed.

Those credit unions that participated in the survey also reported a marginal improvement in the average exam duration this year; however, they noted that more staff time was needed to complete their last examinations. Roughly two-thirds of respondents said they were notified in advance of what the focus of their exams would be, but only by 41 days.

Regarding the relationship between credit unions and their examiners, most respondents expressed greater confidence in their examiners' competence and experience, with only 9 percent reporting that their examiners were "somewhat" or "minimally" experienced (compared to 23 percent last year). Also, 90 percent of respondents reported that their examiners were "very easy" or "somewhat easy" to work with, up from 77 percent in 2016. However, nearly 60 percent of survey respondents said they were either "very concerned" or "somewhat concerned" about exam consistency.

This month's survey also noted credit unions' concerns about the lack of an independent appeals process for disputing exam results. Despite the NCUA's recent proposal that would codify the agency's appeals procedures and expand the number of determinations appealable to its Supervisory Review Committee, 57 percent of respondents said the NCUA needs to establish a formal independent appeals process.

Also included in the Economic & CU Monitor are the results from the August Credit Union Sentiment Index, a composite index based on NAFCU member responses to eight questions on growth and earnings outlook, lending conditions and regulatory burden. The index can range from 0 to 100; a score of more than 50 indicates a generally positive or optimistic outlook.

This month's CUSI showed continued improvement overall with a reading of 68.1, up from 64.2 in July. All four of the component scores improved, with earnings making the biggest leap as respondents reported that earnings conditions were either "somewhat" or "very strong." Most respondents also indicated modest optimism for regulatory relief – or at least a slowdown in the growth of regulatory burden.

NAFCU members are encouraged to participate in the association's surveys. Next month's Monitor will focus on Home Mortgage Disclosure Act compliance. Credit unions can fill out the survey online; responses are due by Aug. 31.