A revised final rule that requires federally insured credit union (FICU) boards of directors to establish succession planning processes for key positions was approved Tuesday by the board of the federal credit union regulator, which set an effective date of Jan. 1, 2026.
The National Credit Union Administration (NCUA) rule, in part, addresses situations that may arise when failure to have such a plan leads to an unplanned merger of two institutions, the agency said in its draft final rule. It also pointed to the ongoing retirements of the “baby boomer” generation (individuals born between 1946 and 1964). It referred to some reporting that noted about 10% of credit union chief executive officers were expected to retire between 2019 and 2021.
“Succession planning is critical to the continued operation of those credit unions with board members and executives that are part of this retirement wave,” the agency said.
The agency noted the following requirements of the final rule:
- An FICU’s board must establish a written succession plan that addresses the specified positions that are vital to the operation and management of the credit union, and that it regularly review the plans to ensure it remains are current;
- Newly appointed members of the board must be familiar with those plans within six months after their appointment.
- For federally insured, state-chartered credit unions in states that have established succession planning requirements, the NCUA will defer to the state’s requirements if no conflict exists between the final rule and the state’s rules.
It said smaller credit unions can develop their plans by using the succession plan template in the final rule, obtain help through the Small Credit Union and Minority Depository Institutions Support Program, and complete online training.
The final rule includes revisions from the July 2024 proposal. Briefly, some of the key changes include:
- The final rule provides that a board must review its succession plan no less than every 24 months instead of annually as proposed.
- Loan officers, credit committee members, and supervisory committee members have been removed from the list of FICU officials who must be covered by the succession plans.
- The final rule streamlines the required contents of the succession plans. It no longer specifies that a succession plan must address unexpected or temporary vacancies in covered positions.
- The final rule no longer requires that deviations from approved succession plans be documented in the FICU board’s meeting minutes.
It said other technical and non-substantive changes were made for clarity.
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