Final Rule – Annual Operating Fee Assessment (Part 701)

The Board adopted a final rule to amend its regulation governing assessment of the annual operating fee to FCUs, including by:

• For purposes of calculating the operating fee, excluding from “total assets” any loan an FCU reports under the Paycheck Protection Program or similar future programs approved for exclusion by the NCUA Board.
• Changing the period used for the calculation of an FCU’s total assets. Currently, total assets are calculated using the FCU’s December 31 Call Report of the preceding year. Under the final rule, total assets will be calculated as the average total assets reported on the FCU’s previous four Call Reports.

CUNA filed a comment letter in support of these changes.

The final rule will become effective 30 days after publication in the Federal Register.

NCUA’s 2021-2022 Budget

In a 2-1 vote, with Board Member Harper dissenting, the Board approved its 2021-2022 budget. 

Total 2021 funding presented in the updated Budget Justification is $341,378,000, a decrease of 5.2% from the 2021 level approved by the Board in December 2019 and a decrease of 1.7% from the Board-approved 2020 level. The 2021 budget is comprised of the: Operating Budget ($314.6 million), Capital Budget ($18.8 million), and Share Insurance Fund Administrative Budget ($8 million).

Total 2022 funding presented in the updated Budget Justification is $343,490,000, which represents an increase of 0.6% compared to the updated 2021 funding level, but which is a decrease of 5.7% from the 2022 level presented in the staff draft.

As expected, Board Member Harper voted against the budget, citing several concerns, including: an insufficient number of examiners (necessary to ensure certain larger and/or riskier credit unions will be properly examined), issues with the current examination scheduling policy, and the lack of a proper consumer protection supervisory program.

Following Mike Schenk’s presentation to the Board, CUNA sent a comprehensive comment letter regarding the 2021-2022 agency budget.

Board Briefing – NCUA Operating Fee Schedule and Overhead Transfer Rate

The Board approved a notice that makes several clarifying changes to the methodology it uses to determine how it apportions operating fees charged to FCUs. Specifically, the notice:

• Clarifies the treatment of capital project budgets when calculating the operating fees;
• Clarifies the treatment of miscellaneous revenues when calculating the operating fees; and
• Modifies the approach for calculating the annual inflationary adjustments to the thresholds for the operating fee rate tiers.

In addition, the notice also addressed feedback received in response to a request for comment on (1) whether to increase the current $1 million asset-size threshold below which an FCU pays no fee, and (2) incentivizing credit unions to complete the annual voluntary diversity survey. Based on public input, the Board agreed with staff to further review both of these issues before making any changes.

In CUNA’s comment letter, we suggested increasing the asset threshold below which FCUs pay an operating fee from $1 million to $10 million. Further, we supported a financial incentive to encourage FCUs to participate in the diversity assessment but only if a comparable incentive is available to FISCUs.