Proposal would raise asset threshold for small credit unions to be exempt from paying operating fees to fund agency

The asset threshold would be raised to $2 million for exempting credit unions from paying annual operating fees to their federal regulator under a proposal issued by the agency board Wednesday.

Released with the unanimous approval by the National Credit Union Administration (NCUA) Board, the proposal would affect adjustments to the methodology the agency’s Office of the Chief Financial Officer uses to determine how it apportions operating fees charged to federal credit unions (FCUs). According to the NCUA, the proposal increases the threshold below which FCUs are exempt from paying an operating fee from $1 million to $2 million and establishes a process to update the exemption threshold in future years based on the credit union system’s annual asset growth.

The agency uses income from the fees to fund part of its annual budget. The other major income portion to the agency comes from the National Credit Union Share Insurance Fund (NCUSIF), which transfers a share of its annual earnings to cover “insurance-related costs” to the agency.

According to a statement by Board Chairman Todd Harper, indexing the threshold for inflation will “provide a measure of relief to these institutions, bring the threshold back into alignment with where it once was, and keep it there going forward.”

The proposal was issued with a 60-day comment period.

In other action, the credit union regulator’s board:

  • Issued a proposal to make changes to the agency’s Minority Depository Institution (MDI) Preservation Program that would, among other things, clarify the requirements for a credit union to receive and maintain an MDI designation. That includes, the NCUA said, providing examples of technical assistance an MDI may receive, establishing a new standard for MDIs to assess their designation periodically, and updating how the NCUA will review an MDI’s designation status. The proposal was issued with a 60-day comment period.
  • Heard a briefing on new credit union charter modernization efforts by the agency. According to the NCUA, the efforts have resulted in a reduction of the time to review and approve a complete application to approximately 130 days from start to end. That has led, the NCUA said, to the number of new charters rising from just one in 2020 to four each in 2021 and 2022.

NCUA Board Approves Proposal on MDI Preservation Program