The NCUA Board has the discretion to reclassify a credit union to the next lower category if the credit union has an unsafe or unsound condition or engages in material unsafe and unsound practices. The NCUA Board may reclassify a well-capitalized credit union as adequately capitalized, and may require an adequately capitalized or undercapitalized credit union to comply with certain mandatory or discretionary supervisory actions as if it were in the next lower category.

“Red flags” examiners watch for as they relate to management

Submitted by sevans on Fri, 01/02/2015 - 4:32pm

Examiners should be aware of any “red flags” which may indicate that the examiner needs to expand analysis and review of the applicable operations. Red flags as they relate to management may include the following:

• Overly dominant manager;

• Manager or key employee involvement in gambling;

• Manager or key employee not taking regular vacations or always working late hours;

• Nepotism on part of the directors or management;

• Other forms of insider abuse or preferential treatment;

• Limited personnel not conducive to segregation of duties;