As the consolidation of the credit union community continues, the number of credit unions declines steadily even as the remaining institutions move forward with increased asset size, growth in membership, and intensification of their span and complexity of operations.

These dynamics, in combination with other factors, have led to increases in the acquisition and possession of real estate assets. In response to this trend and in keeping with its aim to simplify the regulatory structure in to this area, the National Credit Union Administration in October 2015 promulgated a highly modified rule in lieu of its “fixed asset rule.”

The policy codified in NCUA’s Rules and Regulations at §701.36, “Federal credit occupancy planning, and disposal of acquired and abandoned premises,” applies solely to federally chartered credit unions and addresses only real estate ownership. Unlike the policy it replaces, this rule does not apply limitations concerning other fixed assets.

As credit unions increase their holdings in real estate, it is essential to be mindful of NCUA’s policy and observe both its objective and subjective elements. Each institution must have a road map that takes it to full occupancy of the property for its continued ownership or obtains the requisite NCUA authorizations to maintain its property interests.

 

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