Crossing the $10 billion asset threshold will not be as costly as it used to be for credit unions.

The National Credit Union Administration on July 21 approved a final rule raising the total asset threshold for enhanced supervision under the Office of National Examinations and Supervision, or ONES, to $15 billion from $10 billion. Starting Jan. 1, 2023, ONES will examine capital planning and stress tests for credit unions with more than $15 billion in total assets, while credit unions that cross $10 billion in total assets will now remain under regional office supervision. However, credit unions already above $10 billion in total assets under ONES supervision will continue to be supervised by that office.

Rapid industry growth brought about the rule change, NCUA Chairman Todd Harper said at the July 21 meeting. As of March 31, there were 19 credit unions with more than $10 billion in total assets, and that figure is set to nearly double in 2023, according to the regulator.

"Such growth would have required a substantial reallocation of personnel within the agency, and thereby incurred an undue and avoidable cost burden," Harper said. "With the adoption of this rule, we are minimizing budget expenditures and reducing organizational disruptions."

Meanwhile, 11 credit unions had assets of at least $15 billion as of March 31, according to S&P Global Market Intelligence data. Vienna, Va.-based Navy FCU topped that list with $160.44 billion in assets, more than triple the size of the next largest credit union.

Approaching $10 billion

Two credit unions crossed $10 billion in total assets in the second quarter, while 11 more are approaching the threshold, according to data compiled by S&P Global Market Intelligence.

Many of these credit unions are exploring what the final rule means for their future regulation, said Gina Carter, a partner and credit union specialist at law firm Husch Blackwell.

"They're already focusing very seriously on understanding what it would mean to them in terms of compliance," she said in an interview. "There's a tremendous amount of planning going on."

Credit unions approaching $10 billion in total assets still have to face other regulatory hurdles. Similar to banks, once a credit union hits $10 billion, the Durbin amendment kicks in and limits their interchange fee income. Additionally, institutions become subject to more regulatory scrutiny, especially from the Consumer Financial Protection Bureau.

More new rules

Given the rapid growth across the industry, even more regulatory changes could be coming, including four distinct exam processes: a streamlined system for well-run small credit unions; a risk-focused exam regime for small credit unions experiencing difficulties and slightly bigger credit unions up to a certain threshold; a specialized regional program for larger credit unions approaching the $10 billion threshold; and then ONES supervision for the largest credit unions above $15 billion in assets.