ORLANDO, Fla.-It may not go so far as to be a kinder, gentler exam process, but NCUA indicated last week that its examiners will be giving credit unions a bit more room to operate.

Moreover, the agency indicated the asset size to be considered a "small" credit union will be increased in order to lighten the regulatory and compliance load on those CUs, and there are no plans to lower the equity ratio target for the National Credit Union Share Insurance Fund in order to help improve the bottom lines of CAMEL Code 3 and 4 credit unions.

During a "Listening Session" here hosted by NCUA, Chairman Debbie Matz said that moving forward "I think you will see some changes coming from NCUA."

In particular, said Matz, an improved delineation by examiners between mandatory and recommended changes.

"We've gotten a lot of complaints and seen a lot of unrest," acknowledged Matz, "but now we are training our examiners on the differences between (Documents of Resolution) and examination findings. There have been legitimate issues raised there. That's not to say our examiners are going to back off when there are issues there. But we will make more of an effort to distinguish, and I think you will feel that as the year unfolds."

Matz said NCUA will also complete a rewrite of its Supervision Manual by July 1, which should create greater uniformity between the regions and examiners.

Other announcements from the Listening Session, the fourth of six to be hosted by NCUA, by Matz and members of the agency's senior management included:

* NCUA will be ratcheting up how it defines a "small" credit union in the near future. The asset threshold to be considered small by NCUA is currently $10 million; CUs below that asset size have various assistance offered to them through the agency's Office of Small Credit Unions, and also do not need to complete the full questionnaires and other forms NCUA requires as part of its exam process. That issue was raised by the manager of a $13-million CU who estimated that 70% of the questions she has had to spend considerable time answering on the NCUA questionnaire are not applicable to her credit union.

Matz said NCUA will increase the asset size that it considers to be small, most likely in the fall. She called the current $10-million threshold "obsolete."

* Larry Fazio, director of NCUA's Office of Examination & Insurance, said the agency is working to create a prototype ideal problem resolution model. Related to that, he said, "My first advice would be identify your own problems and be upfront about it. That's putting your cards on the table and (examiners) are going to give you credit for that. The other issue is as we come up with problems, identifying what is the root of the problem. We won't always agree on that. Once we get to that point then discuss what does the solution look like. The best solutions should come from the management team. We have trained examiners to defer to your solution if it has a reasonable chance of working."

* When asked about the possibility of reducing the target equity ratio of the NCUSIF to 1.20 from 1.30 in order to provide relief to credit unions, Matz said no such change will be forthcoming. Still, she noted, relief has already been provided in one form with the transfer of $280-million from the NCUSIF to the Stabilization Fund, which reduced assessments. Moreover, NCUA doesn't set the equity target, Congress does, noted Fazio.

Reducing those reserves would be a "gigantic mistake," said NCUA Executive Director David Marquis. "There are a lot of large CUs that are getting larger. It looks good on the surface, but would be disastrous."

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