In a positive step, the National Credit Union Administration (NCUA) Board approved a proposed rule at its board meeting to amend the agency's fixed assets regulation to help federal credit unions better manage their fixed assets. State chartered credit unions are not covered by NCUA’s fixed assets rule.
The proposal is very similar to what the Missouri Credit Union Association (MCUA) urged the board to adopt last year in their comment letter. The proposed rule would remove the requirement for federal credit unions to seek a waiver from NCUA in order to exceed the 5% aggregate limit on investments in fixed assets. This would mean that an FCU that chooses to exceed the 5% aggregate limit could do so without prior NCUA approval, if it implements a fixed assets management (FAM) program; NCUA staff noted that FAMs must be reviewed annually by the credit union.
An FCU’s FAM program would also be subject to supervisory scrutiny and must provide for close ongoing oversight of fixed assets levels and their effect on the financial performance of the FCU, NCUA said. The FAM must also include a written policy that sets an FCU board-established limit on the aggregate amount of the FCU’s fixed assets. The proposal would also simplify the partial occupancy requirement for premises acquired for future expansion under the current fixed assets rule.
NCUA will accept comments for 60 days from publication of the proposal in the Federal Register; The Credit Union National Association (CUNA) will be posting a Regulatory Call to Action shortly and intends to support the proposal but will work with their leadership to identify areas for possible further improvements.