"This is base-level staffing," Kingry acknowledged, adding, "We are monitoring each institution closely in-house and in the field to keep up with our statutory mandate of examination."

The chairman of the Arizona Credit Union League, Steve Dunham, however, suggested that a two-examiner department "for the long term is not a particularly desirable condition to occur for the sake of members and the dual system."

While the NCUA will continue with its regular insurance exams, the preference is for state exams on safety and soundness, compliance and other areas, said Dunham, who also is president/CEO of the $165 million Canyon State CU of Phoenix.

Kingry, a former banker, said one of his tasks as superintendent, a job he landed April 5, is to "to assess the skill sets of our staff to determine how best to use them in these lean economic times" considering the agency cuts and how "these economic times are very difficult for our state credit unions."

"I am meeting with as many institutions as I can to discuss our plans, our resources and our hope," said Kingry, who prior to his appointment by Arizona Gov. Jan Brewer worked for 26 years in commercial banking. In addition to Kingry, Tami Lee Smull, a former banker, has also recently joined the agency as manager of the CU Division replacing veteran Sue Ann Meyer, who retired in March.

Elsewhere among the sand states, it was unclear just how serious the budget-cutting toll might be on the examination process.

In California, a spokeswoman for the Department of Financial Institutions said that while the state's budget gap is estimated at $18.5 billion and state employees were furloughed to help meet the gap, DFI was granted an exemption to the furlough order.

"The number of examiners assigned to examine an institution is adjusted depending on the institution," said the DFI official, adding that the agency "cooperates with the NCUA regarding examinations to maximize the resources available to both entities."

In Utah, Paul Allred, deputy commissioner of the state's DFI, while also acknowledging "it is a stressful time" for banks and CUs, the agency is "able to hold our own," with 36 examiners in its general pool. He added that the department has four open positions that the legislature has ordered it not fill.

In Florida, the president/CEO of the ailing $140 million Bay Gulf CU of Tampa, operating under an April 29 cease and desist regarding loan allowances and modifications, maintained there have been long lapses on state exams for his CU.

William DeMare, president of Bay Gulf, said he sensed "there has been a shortage of examiners" to deal with problem CUs like his which have had to face economic duress in the state's ongoing recession. He said problems were flagged at his CU in September 2008 with capital below 7%, but "we were not examined until December 2009, 15 months later."

A spokeswoman for the Florida Division of Financial Institutions maintained the agency is fulfilling its CU examination role under the law. "All of our positions are filled," said the spokeswoman.

In Nevada, where CUs as a whole have probably suffered the worst during the recession, state regulators argue they have kept pace with examiner staffing.

Nevada Commissioner George Burns said the Financial Institutions Division, which he heads, now has 30 examiners regulating CUs, banks, pay day lenders and others. When the crisis hit in 2008, 10 additional examiner slots were approved by the state.

Mary Martha Fortney, president/CEO of National Associational of State Credit Union Supervisors, characterized the state regulatory system as in "robust" shape as it weathers the crisis. While there are circumstances like Arizona where budgetary problems have arisen, the overall network is functioning well, she said.

–jrubenstein@cutimes.com