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Today, NCUA held their November 2017 Open Board meeting. The Board approved a final corporate credit union rule, the 2018-2019 operating fund budget, and the overhead transfer rate methodology. The Board also received the final briefing on the Corporate Stabilization Fund before it was merged into the National Credit Union Share Insurance Fund.
Corporate Stabilization Fund Quarterly Report. The NCUA staff provided a quarterly briefing to the NCUA Board on the Corporate Stabilization Fund. The report reflects the status of the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) as of September 30, 2017, which is the last day it was in operation. The fund ended the quarter with total assets of $2,562.7 million up from $1,993.3 million in the previous quarter. The TCCUSF was merged into the National Credit Union Share Insurance Fund effective October 1, 2017.
Final Rule, Part 704, Corporate Credit Unions. The NCUA Board approved a final corporate credit union rule that adopts amendments to NCUA’s regulations proposed in July 2017. The amendments revise provisions regarding retained earnings and Tier 1 capital. The final rule primarily affects the calculation of capital after corporates consolidate and sets a retained earnings ratio target in meeting Prompt Corrective Action (PCA) standards.
NCUA’s 2018 – 2019 Operating Fund Budget. The NCUA Board approved the 2018-2019 budget. The combined total of the operating fund budget, share insurance fund administrative budget, and capital budget is $320.9 million for 2018. According to the NCUA, this is less than one percent over the comparable 2017 budget total. The 2018 Operating Budget is $298.1 million and 1,183 full-time equivalents (FTE), and the 2019 Operating Budget is $302.7 million and 1,169 FTEs. The 2018 Capital Budget is $15.4 million and the 2019 Capital Budget is $21.1 million. The 2018 Share Insurance Fund Administrative Budget is $7.4 million and five FTE, and the 2019 budget is $7.5 million and unchanged with five FTE.
For 2018, based on the proposed OTR methodology, the resulting share of the budget funded from the Operating Fee is $128.9 million. This equates to 0.018 percent of the estimated federal credit union assets as of December 2017. The overall increase for the operating fee is an average rate of 15.7 percent over 2017. The OTR—the amount drawn from the Share Insurance Fund— is reduced in 2018, resulting in an increase for financing the budget on Operating Fees.
Also of note, the” Agency Reform Plan” is part of the budget with actions to be implemented in both 2018 and 2019. These include:
Consolidate from five regions to three, and eliminate regional office staff;
Increase the ratio of supervisory examiners to examiners from 1:8 to 1:10 over two years through attrition; and
Initiate actions to enable an 80 percent reduction in leased office space by 2020, and continue to reduce agency travel and training expenses without adversely impacting the mission.
Overhead Transfer Rate Methodology.
The NCUA Board approved updates to the overhead transfer rate (OTR) methodology. The methodology is unchanged from the June 2017 proposal and was supported by CUNA. The OTR for 2018 is set at 61.5.
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