Newsroom

November 16, 2018

NCUA approves 2019, 2020 budgets, sets 2019 OTR

NCUA Board
The NCUA Board during Thursday's meeting.

The NCUA Board Thursday approved of the agency's 2019 and 2020 budgets at spending levels of $304.3 million and $316.2 million, respectively. The board also set the 2019 overhead transfer rate (OTR), which will be 60.5 percent, and the operating fee will increase by an average of 2 percent for natural-person credit unions with assets of more than $1 million.

Last year, the NCUA Board finalized its OTR methodology. The OTR is a transfer from the National Credit Union Share Insurance Fund (NCUSIF) to cover insurance-related expenses paid by both federal credit unions and federally insured, state-chartered credit unions.

Federal credit unions will fund 70.5 percent of the NCUA's 2019 operating budget, and federally insured, state-chartered credit unions will fund 29.5 percent of the budget. The NCUA will charge the fee in March, and payments will be due April 17. NAFCU's Operating Fee Calculator (member-only) can be used to calculate a credit union's operating fees.
 
NAFCU, responding to the proposed budgets in a comment letter and in witness testimony, encouraged the agency stay committed to eliminating inefficiencies and redundancies in its operations so that it is not reliant on annual budget increases.

Also during Thursday's meeting, the board heard a quarterly report on the National Credit Union Share Insurance Fund (NCUSIF) and issued a proposal regarding fidelity bonds.

NCUSIF quarterly report

The board's quarterly report on the NCUSIF revealed an equity ratio of 1.35 percent as of the end of June. This figure is based on insured shares of $1.1 trillion.

Fidelity proposal

The NCUA's proposed rule regarding fidelity bonds aims to accomplish four objectives:

  • strengthen a board of directors' oversight of a credit union's fidelity bond coverage;
  • ensure an adequate period of time to discover and file covered claims following a credit union's liquidation;
  • formalize a legal opinion that permits a natural person credit union's fidelity bond to include coverage for certain credit union service organizations (CUSOs); and
  • clarify the documents subject to the NCUA Board's approval and require all bond forms receive the NCUA Board's approval every 10 years.   

The Federal Credit Union Act sets requirements for the bonding of employees and appointed and elected officials of federal credit unions. In order to obtain federal insurance through the NCUSIF, all federally insured credit unions are required to possess the minimum fidelity bond coverage as prescribed by the NCUA.

This proposal will be out for a 60-day comment period once published in the Federal Register. NAFCU will issue a Regulatory Alert and seek member feedback on the proposed rule.