Newsroom

November 15, 2017

NCUA budgets, OTR methodology slated for approval today

The NCUA Board today is expected to adopt its overhead transfer rate (OTR) methodology, vote on the agency's 2018 and 2019 budgets and finalize its rule on corporate credit unions. Ahead of the meeting, NAFCU continued to encourage more efficiency in the agency's budgets, and fairness and accuracy in its OTR methodology.

The meeting begins at 10 a.m. Eastern. The board will also hear a quarterly report on the Temporary Corporate Credit Union Stabilization Fund (TCCUSF), which was closed on Oct. 1.

The NCUA's new OTR methodology would revise the methodology to three steps from its current eight-step calculation. The proposed methodology also eliminates the examination time survey. In a letter sent to NCUA Chairman J. Mark McWatters Tuesday, NAFCU President and CEO Dan Berger encouraged improving the current OTR methodology, rather than "migrating to a new largely subjective system."

The agency has proposed $298.2 million and $302.8 million in spending during 2018 and 2019, respectively. While the agency has slowed its rate of increase in spending and been more transparent about its budgets, NAFCU witness Beverly Zook, CEO of Money One Federal Credit Union, urged even more efficiency during the board's budget briefing in October. NAFCU submitted further comments to the agency on its budget late last month.

NAFCU also offered its support of the NCUA's corporate credit union proposal in an August comment letter. The proposal would permit corporate credit unions to include all perpetual contributed capital (PCC) as Tier 1 capital if a corporate credit union reaches a new "retained earnings ratio" of 250 basis points. The rule also modifies the definition of retained earnings to include "GAAP equity acquired in a merger" as a component of retained earnings.