Offsite Examination and Supervision Approach

20-CU-05 / March 2020
Offsite Examination and Supervision Approach
To
Federally Insured Credit Unions
Subject
Examination Program
Status
Active
To
Federally Insured Credit Unions
Subj
Examination Program

Dear Boards of Directors and Chief Executive Officers:

In response to the COVID-19 pandemic, the NCUA mandated a strict offsite policy for all employees and contracted support staff as of March 16, 2020. All NCUA examinations will take place offsite through May 1, 2020, and this offsite policy will remain in effect until further notice. We will reevaluate this approach through the duration of the COVID-19 pandemic and will notify credit unions of any changes to the procedures described herein.

Our top priority is the safety of agency staff, credit union employees, and members. During this time, the NCUA will limit the burden imposed on credit unions so that they can focus on providing uninterrupted service to their members. This letter outlines the NCUA’s approach to our examination and supervision program for the duration of the COVID-19 pandemic.

Priority 1 — Credit Unions Experiencing Problems

Field staff will prioritize those credit unions experiencing significant financial or operational problems in our supervision efforts. This includes credit unions that have asked for assistance and those that the NCUA determines may need assistance based on their financial and operational condition. Examiners will work with credit unions to identify what assistance is needed. Please contact your NCUA examiner or regional office if you need agency assistance.

Priority 2 — Contacting All Credit Unions

Examiners will contact each credit union periodically to discuss the institution’s operational and financial status, including any associated challenges, and whether any assistance is needed. Outreach that takes place between March 30 and April 10, will serve as our baseline for monitoring of each credit union’s condition, and NCUA staff will then check-in periodically with each credit union for the duration of the COVID-19 pandemic.

Priority 3 — Conduct Examinations Offsite

Since the NCUA mandated a strict offsite examination and supervision approach on March 16, agency staff has been working with credit unions to obtain documentation and complete examination procedures offsite. Unless approved by the Office of Executive Director, examiners will not require a credit union to provide information to conduct offsite examination work.

If credit unions are occupied with addressing the impact of the COVID-19 pandemic on their operations, employees, and members, they should not be required to address an offsite examination request unless it is a serious or time-sensitive matter. However, when a credit union is able to provide examination documents and make staff available, NCUA examiners will continue to conduct offsite examination work. This will help both the agency and credit unions plan for resource needs when the NCUA reintroduces onsite examinations. In some cases, if examination work can be completed offsite during this time, the NCUA may not conduct any further examination work for a credit union during the 2020 calendar year.

Key procedures for how the NCUA will conduct examinations during the COVID-19 pandemic are outlined below.

  • Any exceptions to the strict offsite approach must be approved by the NCUA’s Office of the Executive Director. While NCUA staff will not schedule any onsite examination work until further notice, the NCUA may conduct onsite work at a credit union if necessary to deal with a serious or time-sensitive matter.
  • Examiners will work with credit union staff to facilitate the secure exchange of information needed to conduct offsite examination and supervision work, and will be mindful of the impact information requests may have on a credit union experiencing operational and staffing challenges associated with responding to the COVID-19 pandemic.
    • Credit unions are not required to provide documentation or make staff available for discussions with examiners at this time, unless approved by the Office of Executive Director.
    • Even if an examination is not scheduled for many months, NCUA staff may contact a credit union to request documentation needed to complete offsite examination activities.
    • Examiners may schedule virtual meetings with credit union staff or officials to discuss an examination if the credit union staff and officials are willing and able to do so.
  • The NCUA understands that credit unions need to focus on continuing uninterrupted service to their members. While examiners will be conducting examination work offsite, the NCUA will generally not be issuing examination reports to credit unions until further notice. If an examination was mostly completed before March 16, 2020, the Regional Director may authorize an examiner to issue a report to a credit union to formally conclude the examination.
    • Once the NCUA begins to issue examination reports, any corrective actions issued to a credit union will be appropriately prioritized and will consider the impact of the COVID-19 pandemic on the credit union’s operations and financial condition.
    • The NCUA will be flexible and reasonable when working with credit unions that have outstanding corrective action items (including Document of Resolution items, Letters of Understanding and Agreement, and Preliminary Warning Letters). A credit union should work with its examiner if it requires flexibility in meeting deadlines.
  • Regional offices continue to coordinate examination and supervision efforts with the state supervisory authorities during this time.

Consistent with long standing practices, examiners will consider the extraordinary circumstances credit unions are facing when reviewing a credit union’s financial and operational condition over the coming months.

Sincerely,

/s/

Rodney E. Hood
Chairman

Last modified on
05/20/20