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

3^rd 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.  

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.

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.