Asset Size Threshold for Small CU Designation Raised

The National Credit Union Administration (NCUA) Board (the Board) has redefined a “small entity” as a credit union with $50 million or less in assets. Initially, the Board proposed raising the asset size threshold to $30 million.

Previously, NCUA has defined a small credit union as having $10 million or less in assets.

The increase in the asset size threshold will result in an additional 2,270 credit unions being designated as a small entity. In total, almost 4,670 are now designated as small credit unions.

In addition, the final rule increases to $50 million the asset threshold used to define a “complex” credit union for determining whether risk-based net worth requirements apply and exempts all federally insured credit unions (FICUs) with assets of $50 million or less from the agency’s interest rate risk rule requirements.

Currently only credit unions with $10 million or less in assets are exempted from interest rate risk and risk-based net worth regulatory requirements.

The Board estimates that the change in the asset size threshold means that approximately 358 FICUs with at least six percent net worth are no longer required to comply with a risk-based net worth requirement and 992 FICUs are exempted from the interest rate risk requirement.

The Board recognizes that excluding more credit unions from some safety and soundness regulations will increase risk; but believes that the incremental increase in risk is acceptable.