NCUA operating fee rule changes would exclude PPP loans, revise asset calculation; comments sought on op fee, overhead transfer rate methodologies

A proposed rule to revise how federal credit union (FCU) assets are calculated for operating fee assessment purposes and another on the methodologies used in setting the agency’s operating fee schedule and overhead transfer rate (OTR) were released for public comment Thursday by the National Credit Union Administration (NCUA) Board.

The proposal on the asset calculation for a FCU’s operating fee would exclude from the institution’s total assets any loan the FCU reports under the Small Business Administration’s Paycheck Protection Program (PPP) “or similar future programs the Board may decide to exclude,” the agency said. The proposed rule would also change the calculation of total assets used in setting the institution’s operating fee: instead of total assets reported on the institution’s Dec. 31 call report of the preceding year, total assets would be calculated as the average total assets reported on the FCU’s previous four call reports available at the time the NCUA Board approves the coming year’s budget – which has typically been done in November (except last year, when it was approved in December).

In other changes, the agency proposes to delete current references in the rule to the Credit Union System Investment Program and the Credit Union Homeowners Affordability Relief Program – two programs, no longer in existence, that were created in the wake of the 2008 financial downturn. The agency said “minor” changes to terminology and organization are also proposed.

This proposed rule, along with the methodologies proposal, is out for comment for 60 days following its publication in the Federal Register.

In its methodologies proposal, the agency proposes clarifications and asks questions about the methodology the agency uses to determine how it apportions operating fees charged to FCUs. The board hopes to act on the proposed changes before 2021 operating fees are assessed.

Specifically, the board proposes to clarify the treatment of capital project budgets and miscellaneous revenues when calculating future operating fees. The proposal would also make conforming changes on the calculation of annual inflationary adjustments to operating fee rate tier thresholds to be consistent with the above-noted proposed operating fee rule changes.

Questions on which input is sought include how or whether the agency board should modify the current three-tier operating fee schedule, how or whether it should increase the asset threshold below which FCUs are assessed no fee, and what incentives it might provide to encourage credit union participation in the annual voluntary diversity self-assessment.

Regarding the overhead transfer rate (OTR) methodology– a “principles-based” methodology used to calculate how much of the agency’s yearly budget will be paid through the National Credit Union Share Insurance Fund (NCUSIF) – no changes are proposed. However, the agency noted, “the NCUA Board committed to requesting public comment on the OTR methodology every three years and in the event it proposes a change to one or more of the principles.”

The board on Thursday also received a mid-year briefing on the agency’s 2020 budget. No changes are being made to the approved budget.

Proposed changes to operating fee rule

Request for comments on methodologies for OTR, operating fee schedule

2020 mid-session budget review