On December 17, 2024, the National Credit Union Administration (NCUA) Board approved the final rule on succession planning, a move designed to ensure leadership continuity and prevent unplanned mergers.
With the rule set to take effect on January 1, 2026, your credit union must understand the impacts and take action now to comply.
Why Succession Planning Matters for Credit Unions
Leadership transitions are inevitable, and without a structured plan, your credit union risks instability, operational disruptions, and even forced mergers.
Source: Chairman Harper
The NCUA’s final rule addresses this issue by requiring federally insured credit unions to establish a formal succession planning process.
This proactive approach helps maintain institutional knowledge, safeguards members' financial well-being, and ensures long-term sustainability.
Who Must Follow the Rule?
The rule applies to all federally insured credit unions (FICUs), which includes:
- Federal Credit Unions (FCUs) – Directly chartered and regulated by the NCUA.
- Federally Insured, State-Chartered Credit Unions (FISCUs) – State-chartered credit unions that carry NCUA share insurance through the National Credit Union Share Insurance Fund (NCUSIF).
What About State-Chartered Credit Unions?
For state-chartered credit unions, the rule applies as long as it does not conflict with state law. If a state has different succession planning requirements, those state rules take precedence over the NCUA’s rule.
Key Requirements of the Final Rule
Under the new rule, credit unions must:
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Develop a Written Succession Plan – The board of directors must create a documented plan outlining how the credit union will fill key leadership positions in case of unexpected departures.
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Identify Critical Roles – The plan must specify positions vital to the operation and management of the credit union.
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Regularly Review and Update Plans – Succession plans should be reviewed "no less than every 24 months" (NCUA) to ensure they remain relevant and effective.
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Board Familiarity Requirement – Newly appointed board members must be familiarized with the succession plan within six months of their appointment.
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State Compliance Considerations – For federally insured, state-chartered credit unions, the NCUA will defer to state requirements if they align with the final rule.
What This Means for Your Credit Union
1. Preventing Unplanned Mergers
Many credit unions do not currently have a succession plan, but unplanned departures of key leaders can leave your credit union vulnerable to a forced merger or even closure. This rule encourages proactive leadership transitions, reducing the risk of losing institutional independence.
Source: America's Credit Union
2. Ensuring Compliance & Avoiding Penalties
Since the NCUA now mandates succession planning, failure to comply could lead to regulatory scrutiny. Having a well-documented plan ensures your credit union remains in good standing.
Keep Reading: 2025 Credit Union Compliance Checklist
3. Supporting Smaller and Minority Depository Credit Unions
Smaller credit unions, particularly those serving low-income and minority communities, often face challenges in leadership transitions. The NCUA offers support through:
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A succession plan template (see here)
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The Small Credit Union and Minority Depository Institutions Support Program
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Online training through the NCUA Learning Management System
Steps to Take Now
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Assess Current Leadership Risks – Identify key personnel and evaluate potential vulnerabilities in leadership continuity.
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Develop a Succession Planning Framework – Outline a structured approach that includes interim leadership strategies, internal promotions, and external hiring considerations.
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Leverage NCUA Resources – Utilize templates and training provided by the NCUA to build a comprehensive plan.
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Educate Your Board – Ensure board members understand the importance of succession planning and their role in its oversight.
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Regularly Review and Update – Keep the plan up to date by conducting periodic reviews and adjustments based on changing needs.
Ensure Compliance & Secure Your Credit Union’s Future
The NCUA’s succession planning rule is essential for ensuring leadership stability and preventing unplanned mergers. By implementing a solid plan now, your credit union can stay compliant, protect its future, and minimize risks.
With the January 1, 2026, deadline approaching, now is the time to act. Stay ahead of evolving regulations—download our free Compliance eGuide today.
