How Does NCUA Follow Up on a DOR?

The National Credit Union Administration (NCUA) generally follows up on a Document of Resolution (DOR) within 120 days after the completion due date has passed, through both onsite and offsite supervision. For a CAMELS 3, 4, or 5, that follow-up usually rides on the regular supervision schedule rather than a separate clock

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Where the 120 days comes from

The National Supervision Policy Manual (NSPM) 26.0 sets it in the Follow-up section, page 233. If the examiner can't complete a follow-up in that window, they must document the reason, with Supervisory Examiner approval, in the Closed Information Questionnaire, the closed portion of the record the credit union doesn't see. A follow-up that runs long is an approved exception a supervisor had to sign.

For a CAMELS 3, 4, or 5, follow-up is the exam schedule

NSPM 26.0's Follow-up Exams section, pages 152 and 153, sets the minimums:

•        An FCU at composite CAMELS 3 under $250 million in assets: a follow-up exam or an onsite supervision contact, at the Regional Director's discretion

•        An FCU at CAMELS 3 with $250 million or more, or at CAMELS 4 or 5 at any size: at least one follow-up exam between exams

•        A federally insured, state-chartered credit union (FISCU) at CAMELS 3, 4, or 5 above

$250 million: at least one follow-up exam between exams

Every follow-up exam must include a joint conference with the board.

An older understanding of this will steer you wrong. NSPM 10.0 ran on hard day counts: a CAMEL 3 over $50 million every 180 days, a CAMEL 4 or 5 over $50 million every 120 days, completion date to completion date. The threshold moved from $50 million to $250 million, and the day counts became “at least one between exams,” measured completion date to start date. A $100 million CAMELS 3 waiting on a 180-day drumbeat is waiting on a requirement that no longer exists.

What the examiner actually does

Items that can be confirmed offsite are handled offsite: a call or email about status, then the examiner marks the item resolved or unresolved in Issue Management and closes the contact in the Modern Examination and Risk Identification Tool (MERIT). Anything needing eyes on it waits for the next scheduled onsite contact. Either way, the prior DOR goes into the examination scope at the next follow-up contact or exam.

For an unresolved item, NSPM 26.0 directs the examiner to identify why before deciding what to do, and to weigh whether the corrective plan proved unachievable or unreasonable and how management responded to it.

NSPM 10.0 gave examiners more to work with: a five-question diagnostic, plus an explicit statement that a repeat DOR may not be warranted where management made a good-faith effort or finished most of the plan and the rest can be corrected in the normal course of business. That sentence is gone from 26.0. You can still make the argument, since an unreasonable plan is one of two things the current manual tells the examiner to weigh, but you're making it without the language that used to make it for you.

When your corrective action counts as done

Under Closed (Resolved) or NLA DOR Items, page 235, examiners must close a DOR Issue once the credit union has implemented the action agreed upon in the corrective action plan, even if financial trends don't yet reflect the improvement the action was meant to produce. The manual's own example is a plan calling for expense cuts where the credit union made adequate cuts but the operating expense to average asset ratio stays high for two more quarters. The examiner should close the item.

Two limits. “Implemented the action agreed upon” is doing real work there, so if what you did isn't what the plan called for, closure isn't owed. And a close doesn't end the subject, because the manual lets the examiner document continued monitoring or open a new DOR Issue for the credit union to reach the agreed-upon goal.

If the item is still open

Miss the timeframe and the examiner will require a written response, regardless of CAMELS rating. A repeat item gets an asterisk and a footnote the manual dictates word for word: “This is either a repeat or carry-over DOR. Please see the DOR Status Update document for specific information on individual DOR items.” The examiner also weighs the failure to resolve in the management CAMELS component and the overall composite, so an unresolved DOR reaches your ratings.

From there the examiner will recommend more enforcement action, such as a Regional Director Letter (RDL), a Letter of Understanding and Agreement (LUA), or a Preliminary Warning Letter (PWL). If the supervisor disagrees with escalating, the examiner documents that rationale, the problem, the agreements to correct it, and the supervision plan in the Closed Information Questionnaire, in a file the credit union never sees.

There's a layer above the examiner. Under Quality Control, page 237, the Office of Examination and Insurance (E&I) periodically reviews reports and samples examinations, notifies the regions of long-standing problems and DOR items, and the regions follow up with exam staff. An item open long enough can draw attention your examiner didn't generate.

What makes follow-up go smoothly

For a CAMELS 3 or 4 of any real size, the examiner is already collecting monthly financial reports and board minutes. Folding DOR progress into that flow lets the examiner watch the work happen instead of reconstructing it at follow-up. Assign each item to a named person, because without that accountability projects have a way of falling apart, and keep the reporting visible to the management team, the board, and the supervisory committee.

The counterweight, and we've watched it happen: the reporting can become the work. With fifteen or twenty items on a compressed timeline, a credit union can spend all its time reporting progress and make very little of it.

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