NCUA Pares Back Annual Budget, Addresses Succession Planning, and More...

By Lisa Freeman
CUbroadcast Contributing Editor
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ALEXANDRIA, Va.--The NCUA significantly pared back both its final rule on succession planning and its annual budget from what had been proposed originally at its last monthly board meeting of 2024.

With a mission of preventing forced mergers of small credit unions that are decimated by the departure of even just one or two key employees, the succession planning rule was approved with several notable revisions, among them:

• Plans may be reviewed every 24 months rather than annually;
• Supervisory committee members, credit committee members and loan officers are no longer required to be included in the plans;
• Deviations from the plan -- and explanations for such deviations -- do not have to be documented in board minutes.

Perhaps the biggest change of all however, was what was added: a requirement that the rule be reviewed in three years, so that if it cannot be showed that the rule is accomplishing its mission, the board can choose to nix the rule.

While NCUA Chairman Todd Harper pointed out that the agency is required to review one-third of its rules every year, thereby doing a full review of all rules within a three-year time period, NCUA Vice Chairman Kyle Hauptman said what makes this particular review special is that the NCUA Board in 2029 (three years after the rule’s Jan. 1 2026 implementation date) should be in a unique position to determine whether it has accomplished its stated mission.

Hauptman noted that the rate of decrease in the number of banks and credit unions are almost uncannily similar. He therefore proposed that federally insured banks be considered the control group for comparison. If the credit unions’ curve of decline still closely mimics that of banks, he said, it will be clear that the rule didn’t do its job and the board should get rid of it.

Also on the agenda was both the 2025 and 2026 budgets, both of which were lowered considerably from what had initially been proposed.

“The net impact of these adjustments in comparison to the staff draft is to (1) lower the recommended 2025 final operating budget by $37.0 million and six positions, (2) lower the recommended 2025 final capital budget by $0.8 million, and (3) increase the 2025 final Share Insurance Fund administrative expenses budget by $172,000,” according to NCUA Chief Financial Officer Eugene Shied. “The recommended 2025 combined final budget (operating, capital, and Share Insurance Fundadministrative expenses budgets) is $395.4 million and 1,255 positions. This is $37.7 million and six positions lower than the 2025 staff draft budget.”

Similarly, the 2026 combined budget is $419.5 million and 1,263 positions, which is a reduction of $49.0 million and 9 positions.

“For too many years, the NCUA has been a runaway train of frivolous spending when they should be finding ways to cut costs," commented Jim Nussle, America's Credit Unions President/CEO. "We appreciate the agency taking another look at its staff needs and reducing that proposal, but we still have concerns with its spending. With this final budget, the agency isn’t reducing or being more efficient in its spending. Instead, it simply reduces the cash buffer in the Operating Fund. While America’s Credit Unions supports a thorough review of agency cash needs and a return of surplus funds to credit unions, this is not a sustainable strategy. Eventually these surplus credits will dry up and credit unions will be stuck with the bill.”

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