NEWS: The NCUA Board has approved a final rule, which takes effect Jan. 1, 2026 that will require the boards of all federally insured credit unions (FICUs) to establish written succession plans for key positions. The rule will apply to all Wisconsin credit unions (since they must be federally insured), regardless of asset size.
Rule includes changes that League & others had sought
In September, The League filed a comment letter to share Wisconsin’s credit unions’ concerns with the succession planning proposal. We made several arguments against the proposal, summarized in this Compliance Courier.
The NCUA received 187 public comments on the proposal. In response, the final rule includes several changes that commenters asked for, including these:
- Credit union boards must review their succession plan at least every two years, not annually, as originally proposed;
- Loan officers, supervisory committee members, and credit committee members were removed from the list of officials that a succession plan must cover; and
- The final rule no longer requires a succession plan to address unexpected or temporary vacancies.
The changes were intended to give credit unions more flexibility, the NCUA said.
Key elements of the rule
Under §701.4(e) of the NCUA’s regulations, a FICU’s board of directors must establish a written succession plan that fits its size, as well as the complexity and risks of its operations. The NCUA wrote:
The expectation is for a FICU to develop a succession plan that is consistent with its size and complexity. Therefore, smaller FICUs are more likely to have a simple succession plan that only addresses a few key leadership positions. Larger and more sophisticated FICUs are expected to have more detailed plans. For example, smaller FICUs may have fewer board members, or have fewer staff that would qualify for the positions listed in the proposed rule for inclusion in the succession plan. Likewise, smaller FICUs are likely to have less expansive employee recruitment, development, and retention strategies.
At a minimum, the plan must address these positions (or their equivalents, if the credit union uses different titles):
- Members of the board of directors.
- Management officials and assistant management officials, if the FICU has provided for such positions in its bylaws.
- To the extent not already covered, any other senior executive officers, which the NCUA rules define as “a credit union’s chief executive officer (typically this individual holds the title of president or treasurer/manager), any assistant chief executive officer (e.g., any assistant president, any vice president or any assistant treasurer/manager) and the chief financial officer (controller). The term ‘senior executive officer’ also includes employees of an entity, such as a consulting firm, hired to perform the functions of positions covered by the regulation.” See NCUA Rules §701.14(b)(2).
- Any other personnel the board deems critical, given the FICU’s size, complexity, or risk of operations. This includes new positions that may be required due to planned changes in operations, supervisory landscape, or corporate structure.
For each position listed in the plan, it must address:
- The position’s title and the expiration of the incumbent’s term (if serving in a term-limited capacity) or other anticipated vacancy date if known (such as the incumbent’s retirement eligibility date or announced departure date).
- The credit union’s plan for permanently filling a vacancy in that position.
- The credit union’s strategy for recruiting candidates for the position. The rules say: “The strategy must consider how the selection and diversity of skills among the employees covered by the succession plan collectively and individually promotes the safe and sound operation of the … credit union.”
The credit union’s board must review the plan under a schedule it establishes, but at least every 24 months.
Newly elected or appointed board members must have a “at least a working familiarity” with the credit union’s succession plan within six months after joining the board. NCUA Rules §701.4(b)(3)(ii).
Many resources available to help
Smaller credit unions can develop succession plans with the NCUA’s succession plan template, getting assistance through the Small Credit Union and Minority Depository Institutions Support Program, and completing online training available through the NCUA’s Learning Management System.
The League offers training and other resources to help credit unions develop their succession plans. For example:
- The League’s “Planning Resources” page offers links to abbreviated and extended versions of sample succession plans.
- The League’s Leadership Institute is designed to help emerging and mid-level managers build their leadership skills to more effectively prepare for succession planning and promotion.
- Josh Roberts, The League’s VP of System Collaboration & Development, hosts a new video on “Credit Union Development 101” (which is #6 in our “Lessons on The League” video series). It covers strategic planning and succession planning.
The NCUA has offered other suggestions that FICUs may want to consider, related to succession planning:
- The NCUA has posted a video series on succession planning.
- A 2019 NCUA rule on FCU bylaws promoted succession planning by providing guidance on associate director positions. The NCUA wrote, “these positions may be thought of as apprenticeships in which the incumbent receives training and knowledge about the business of the board, with the expectation that the experience will prepare the individual to serve as a director if elected for such a position by the membership or appointed on an interim basis in an exigent circumstance. FISCUs may wish to provide for similar positions if consistent with applicable state law and regulation, and applicable credit union bylaws.”
- FICUs with a low-income designation may be able to apply for technical assistance grants to support succession planning or offset training costs through the Community Development Revolving Loan Fund, the NCUA wrote. This NCUA video explains how to apply.
- The NCUA said it encourages FICUs to use existing information in preparing their plans. For example, NCUA guidelines encourage all FICUs to develop a program to prepare for a catastrophic act. Those guidelines suggest that the program should address several elements that are also relevant to succession planning. These suggested elements include a “business impact analysis to evaluate potential threats,” the determination of “critical systems and necessary resources,” and the identification of the “[p]ersons with authority to enact the plan.”