Hopes that NCUA Chairman Debbie Matz' final regulatory reliefinitiative would be a return to an 18-month exam cycle were dashed Thursday in aletter to Congress.

Responding to Rep. Frank Guinta (R-N.H.), Matz said theearliest credit unions would see exam cycle reg relief would be the end of 2017. The chairman,who announced Wednesday she would leave the board effective April30, said the agency must first adjust to regulatory improvementsand build out systems and processes to support them.

“Given that the agency's 2016 exam cycle and budget are alreadyin place, there is a limited amount of organizational capacity tomake such changes at this time. The agency already has put inmotion many initiatives that would improve the examination process,which will take time and resources to complete and that would bethe critical aspects of the foundation upon which the NCUA boardmight consider extending the examination cycle,” Matz wrote in theletter.

The extended cycle might run longer shorter than 18 months, shecontinued, depending upon the new systems' effectiveness, andsafety and soundness.

“These new processes and procedures are scheduled to be in placeby the end of 2017. At that time, the NCUA board will be in abetter position to consider a comprehensive, well-integrated planfor an extended examination cycle that complies with therecommendations previously made by the U.S. GovernmentalAccountability Office and the NCUA's Office of Inspector General,”Matz wrote.

In the meantime, Matz concluded, the NCUA will continueimplementing its streamlined exam program for healthy credit unionswith fewer than $30 million in assets and giving discretion tofield staff to apply similar exams for credit unions with $30million to $50 million in assets with CAMEL ratings of 3 orbetter.

“Credit unions that are well-run and well-managed deserve andneed the relief that shortened exams provide,” NAFCU Executive VicePresident of Government Affairs and General Counsel Carrie Huntsaid in a release that responded to the letter. “Two years is toolong to wait for this relief. While we appreciate Chairman Matz'sdesire to prioritize modernization efforts, we believe a shortenedexam cycle can be implemented in tandem with those efforts. NAFCUwill continue to strongly advocate for this change.”

When Matz leaves the NCUA board in April, Vice Chairman Rick Metsgerwill not automatically take the chairman's position. Thatdesignation must come from the president, according to NCUA PublicAffairs Specialist John Fairbanks, who cited the Federal CreditUnion Act.