NCUA’s 2026 Draft Budget: What It Really Means for Credit Unions

NCUA Draft Budget Can Be Found at NCUA.GOV

NCUA’s 2026 Draft Budget: What It Really Means for Credit Unions

The National Credit Union Administration (NCUA) has released its proposed 2026–2027 budget, and it marks the most dramatic downsizing of the agency in over two decades. While the credit union industry is largely cheering the cuts, the details reveal both opportunities and risks.

The Big Picture

The proposed 2026 budget totals $313.8 million — a 20.6% decrease from 2025 and 25.2% below what was originally planned.

According to NCUA, the reduction comes from three primary drivers:

• 23% reduction in staffing

• 34% reduction in contracted services

• 13% reduction in employee travel

For credit unions, this means less examiner interaction, longer intervals between exams, and more reliance on data-driven offsite reviews.

Staffing Cuts: Back to 2003

The most striking change is staffing. NCUA is reducing its workforce from about 1,225 employees to 967 in 2026 — the lowest level since 2003, when the agency had 971 staff.

Consider the contrast:

• In 2003, credit unions held about $600 billion in assets.

• Today, the system holds nearly $2.3 trillion, with fewer but larger and more complex institutions.

• In 2003, NCUA supervised around 9,500 credit unions. Today there are fewer than 4,700, but the remaining institutions look and act more like banks.

In other words, NCUA is preparing to supervise a system that is four times bigger … with the leanest workforce it has had in over twenty years.

Which Offices Are Hit the Hardest?

The staffing cuts are not evenly distributed. Some of the steepest percentage reductions include:

• Executive Director’s Office: –31.6%

• Examination & Insurance: –29.1%

• Credit Union Resources & Expansion (CURE): –25.6%

• Office of National Examinations & Supervision (ONES): –25.0%

Even the Regional Offices, which carry the bulk of field supervision, lose nearly 19% of staff.

Technology as the Counterweight

While staff and contractors are being cut, NCUA is increasing its Capital Budget to $18.1 million. A full $10 million “transformation fund” is earmarked to support reorganization, improve productivity, and fund Administration priorities.

Key technology projects include:

• MERIT Enhancements ($2.9M): stronger security, streamlined navigation, consolidated analytics

• Consumer Assistance CRM Upgrade ($1.0M): replacing the outdated complaint-tracking system

• Enterprise Computer Refresh ($3.2M): upgrading laptops for examiners and staff

• IT Security & Infrastructure Refresh ($0.9M): updating hardware and improving resilience

The message is clear: fewer people, more tech.

Exam Schedules: Longer Cycles, More Offsite Oversight

In April 2025, the NCUA Board approved extending exam cycles for qualifying credit unions. The 2026 budget assumes this change continues.

That means:

• Fewer in-person exams for well-rated institutions

• More offsite analytics and data requests to fill the gap

• Greater reliance on examiner judgment with less time per exam

Industry Sentiment: Cheering the Cuts

It’s no secret — many in the credit union industry are celebrating. Less staff at NCUA means less oversight, fewer touchpoints, and more room to operate.

And in the short term, that’s true. For well-run credit unions with good examiners, the next 3–7 years may feel like a win.

But there are risks:

• Less negotiation: Examiners won’t have time to debate findings

• More turnover: The Voluntary Separation Program removed many experienced examiners

• More overreactions: A less-seasoned examiner may push too hard when they spot a problem

• Missed issues: Inevitably, gaps will lead to credit union losses

When that happens, the Inspector General will investigate, recommendations will follow, and a future NCUA Board will likely rebuild staff.

The Pendulum Always Swings

In the near term, the 2026 budget creates breathing room for strong performers. But history tells us the pendulum will swing back.

For now, the advantage belongs to credit unions that:

• Stay proactive in communications

• Keep their houses in order

• Prepare to handle examiner turnover and uneven quality

For weaker institutions, the risks are greater. And for the system overall, the question remains: can technology truly replace people in maintaining safe and sound oversight?

Final Word

The NCUA’s 2026 budget marks a historic transformation. It’s the smallest workforce in over 20 years, overseeing the largest and most complex system in credit union history.

In the short term, credit unions will welcome the lighter touch. But in the long term, the system will feel the cracks — and staffing will eventually rise again.

Until then, credit unions should take advantage of the current environment, while preparing for the inevitable swing back.