Compliance Blog

Written by Victoria Daka, Regulatory Compliance Specialist

In the NCUA’s most recent Board meeting, the NCUA Board approved a proposal providing regulatory relief to thousands of federal credit unions by eliminating certain provisions in the agency’s fixed-assets rule. This proposal, if adopted, as is, would make three changes.

First, the proposal would eliminate the five-percent cap on investments in fixed assets. Thus, the proposal would relieve federal credit unions from the requirement to obtain a waiver to exceed the current five-percent aggregate limit on investments in fixed assets. The rule defines fixed assets as “premises, furniture, fixtures, and equipment, including any office, branch office, sub office, service center, parking lot, facility, real estate where a credit union transacts or will transact business, office furnishings, office machines, computer hardware and software, automated terminals, and heating and cooling equipment.” However, the proposal indicates that examiners would reserve the right to supervise federal credit unions investment levels in fixed assets, as opposed to the regulatory limitation under the current rule.

Second, the proposal would establish a single six year time period for partial occupancy of any premises acquired for future expansion, starting from the date of acquisition.  Under the current rule, a federal credit union must show that it will fully occupy the premises within a reasonable time by requiring the federal credit union’s partial occupancy of the premises within a time period set by the rule.  The rule sets a distinction in the requirements between improved and unimproved property. Specifically, for improved premises acquired for future expansion, a federal credit union is currently permitted up to three years from the date it obtains the property to meet the partial occupancy requirement, unless NCUA grants a waiver.  And for unimproved land or unimproved real property, a federal credit union has six years from the date of acquisition. The proposal would permit federal credit unions up to six years from the date of acquisition to meet the partial occupancy requirement, regardless of whether the premises are improved or unimproved property.

Third, the proposal would eliminate the requirement that a federal credit union apply for a waiver from the partial occupancy rules within thirty months of acquisition. Instead, the proposal would allow federal credit unions to apply for a waiver at any time, as appropriate.

The proposal has a 30-day comment period.