"The way we process exams, they're all reviewed in this office. I read every one of them," Smith said. "We decided to issue a bulletin reminding credit unions of the regulation. We don't have our own regulation. We default to NCUA regulation."

Kansas has not had any major issues, but because of MBL problems at credit unions in other states, Smith said the bulletin is a just a reminder to be informed.

Among the reminders, a credit union board must use the services of an individual with at least two years' direct experience with the type of MBL the credit union will be engaging in.

Generally, the total of a credit union's net MBL balances and the nonmember loan balances must not exceed the lesser of 1.75 times the credit union's net worth or 12.25% of the credit union's total assets unless the credit union has first received approval from the KDCU administrator and the NCUA regional director, according to the bulletin.

Kansas' credit unions were also reminded to be aware of collateral and security requirements and ensured that their boards adopt a MBL policy with certain minimum requirements that must be reviewed annually.

Smith said of Kansas credit union total loans, 4.84% are MBLs. Of the $2.9 billion total loans, $141 million are MBLs. Those figures, from third-quarter 2011, are well below national numbers, he pointed out. As of the third quarter, MBLs made up 6.94% of the credit union's industry's total loan portfolio. Of the $40 billion in total national loans, $572 million were MBLs.

"That's not a surprise here in Kansas," Smith said. "The credit unions are relatively small and not a lot of them do MBLs or are below the $50,000 loan mark."

According to the Kansas Credit Union Association, MBLs are playing an increasing role at Kansas credit unions. Originations slowed to $59.4 million in 2011, down 14.7% from the $69.7 million originated in 2010. Despite the lower volume, outstanding balances increased 3.2% over balances held at the end of 2010.