At today's board meeting, NCUA issued
a Proposed Rule on Chartering and Fields of Membership, received a Quarterly
Report on the Corporate Stabilization Fund, adopted the 2016/2017 Annual
Performance Plan, adopted NCUA’s 2016/2017 Operating Budget and Corporate
Stabilization Fund Oversight Budget, established the 2016 Overhead Transfer
Rate and Operating Fee Assessment Scale.
Proposed
Rule – Appendix B of Part 701, Chartering and Fields of Membership.
This
proposed rule modernizes NCUAs Fields of Membership rule:
- Allows
an FCU to convert to a community charter or expand an existing community
charter without having to serve the core area if electing to serve a portion of
a Core Based Statistical Area. NCUA will
continue to review the credit union’s ability to serve the requested area;
- An
FCU will be able to serve a Combined Statistical Area as designated by
OMB. This is an improvement over the
current limitation of a Metropolitan Statistical Area subject to a population
cap of 2.5 million;
- An
FCU can apply to serve an outside area contiguous to its existing Core Based
Statistical Area or single political jurisdiction using a written narrative to
demonstrate interaction or common interests;
- Congressional
Districts will be recognized as a well-defined local community and permit an
FCU to serve an area consisting of the geographic boundaries of the
Congressional District;
- The
rural district population is increased to 1,000,000;
- When
a credit union seeks to serve an Underserved Area, NCUA will not recalculate
the concentration of facilities ratio analysis, excluding any non-depository
institutions or non-community credit unions or both from the concentration of
facilities ratio. However a second analysis
will still include other multiple common bond credit unions in the area;
- NCUA
will also consider alternative methods to determine whether a proposed area is
underserved by other financial institutions (provided data relies on NCUA data
or other banking regulator). A credit
union could use CFPB data which uses HMDA data to calculate underserved;
- Definition
of “service facility” for purposes of establishing an FCU’s “Reasonable
Proximity” is modified for multiple common bond FCUs to include a transactional
website or mobile platform that permits accepting shares for members’ accounts,
accepting loan applications or dispersing loans;
- For
purposes of recognizing the occupational affinity between a SEG sponsor’s own
employees and those of each sponsor’s contractors, NCUA would not make a distinction
between a single common bond credit union and a multiple common bond credit
union. Multiple Occupational Common Bond
credit unions will have the ability to add persons who work regularly for an
entity that is under contract to any of the multiple SEGs;
- Multiple
common bond FCUs can include in its field of membership, employees of an
industrial park’s tenants, such as tenants of a shopping mall, business tenants
of an office building or complex within certain limits (3,000 employees and
employees must work regularly at the park);
- Streamlined
process for stand-alone feasibility of groups between 3,000 and 4,999 potential
members (in addition to the existing streamlined process for groups less than
3,000); and
- Definition
of a TIP charter expanded to include employees of entities that have a strong
dependency relationship with employees who work directly with employees of
other entities within the same industry.
Corporate Stabilization Fund Quarterly Report
3rd
Quarter Statistics for the Corporate Stabilization Fund were presented by
Rendell Jones. $11.5 million in revenue
was reported. Cash balances increased in September as a result of the recent
settlements. A repayment of Treasury
balances were agreed to be made. Borrowings were down to $1.9 billion. Jones noted that the recent legal settlements
will not show up until the next financials.
There
is no likelihood of a premium or assessment in 2016.
2016/2017 Annual Performance Plan
The
2016/2017 Annual Performance Plan was adopted by the Board. It designates the following performance goals
as priorities:
- Implement
a robust supervision framework for finalized financial reform regulations,
including interest rate risk, liquidity and contingency funding plans,
derivative authority, and capital planning and stress testing.
- Issue
industry guidance related to emerging cybersecurity risks and related threats;
- Monitor
issues or trends in consumer complaints to develop and promote financial
literacy education and consumer protection programs;
- Develop
and communicate guidance to credit unions to explain regulatory changes and
best practices;
- Increase
women and minority representation at all levels at NCUA, particularly within
the management ranks;
- Strengthen
security programs and security-related communications.
Chairman
Debbie Matz indicated they may return to an 18-month exam cycle in the future
for well performing credit unions, however, it was not likely in the next year
to allow some of the regulatory relief programs to take effect and for
technology upgrades.
NCUA’s 2016/2017 Operating Budget
and 2016/2017 Corporate Stabilization Fund Oversight Budget
Operating Budget:
2016:
Operating Budget
established at $290.9 million representing a 4.1% increase, with 1,247
full-time equivalents (1.7% reduction).
2017:
Operating Budget
established at $302.9 million representing a 4.1% increase with 1,247 full-time
equivalents (no change).
Corporate Stabilization Fund
Budget:
2016:
Corporate Stabilization
Fund Budget established at $4.0 million (2.4% reduction), with five full-time
equivalents (no change)
2017:
Corporate Stabilization
Fund Budget established at $4.1 million (1.8 percent increase), with five
full-time equivalents (no change)
Capital Budget:
2016
- Capital Budget:$10.1 million
2017
- Capital Budget: $13.7
million
2016 Overhead Transfer Rate
An
overhead transfer from the NCUSIF is assessed to cover the expenses associated
with insurance-related functions of NCUA’s operations. The current rate for 2015 is 71.8
percent. For 2016 the Board adopted a
rate of 73.1 percent indicating the primary driver of the increase was an
increase in the percentage of insured shares held by state chartered credit
unions (up 0.9 percentage points to 47.7 percent). 73.1 percent of the total operating budget
will be paid out of the NCUSIF with the remaining 26.9 percent of the Operating
Budget paid for through the federal credit union operating fee.
2016 Operating Fee Assessment Scale
The
operating Fee Assessment methodology was approved by the board for the 2016
assessment cycle. The board:
- Delegated
authority to the CFO to administer the methodology approved by the Board for
calculating the operating fees and to set the fee schedule as calculated per
the approved methodology;
- Increased
the asset level dividing points for the natural-person federal credit union
operating fee scale by 4.75 percent, which is equal to the estimated asset
growth;
- Decreased
the natural-person federal credit union operating fee rates by 0.47 percent,
which is equal to the rate adjustment approved by the Board;
- Required
the operating Fund to maintain sufficient cash reserves equal to no less than
one month of expenses plus any contingencies; and
- Require
collection of 2016 operating fees by Friday, April 15, 2016.