ALEXANDRIA, Va. The NCUA Board this morning approved a rule broadening the definition of “small credit union” from $10 million to $50 million, thereby exempting an additional 2,400 credit unions from the agency’s rules on risk-based capital and interest-rate risk.
The broadening of the “small credit union” definition will also expand from the current 2,300 to almost 4,700, the number of credit unions eligible for grants and consulting help under NCUA’s Small Credit Union Assistance program.
The move is the second regulatory relief initiative undertaken in recent months by NCUA, which added 800 credit unions to its list of “low-income” designees in the fourth quarter, thereby exempting them from the cap on member business loans and prohibitions of non-member deposits and secondary capital.
NCUA set the current $10 million “small credit union” threshold in 2003 but decided to raise the threshold all the way to $50 million to account for industry growth, consolidation and inflation since then.
The exemption from the agency’s risk-based net worth rule reduces the chances that a “small credit union” could become subject to additional PCA provisions due solely to a risk-based net worth requirement
The “small credit union” designation also exempts credit unions from NCUA’s new interest-rate risk rule requiring credit unions to develop and adhere to an interest-rate risk policy.