In addition to its vote on the agency’s 2017-18 budget, the NCUA board received two briefings at Thursday’s meeting: one on the 2017 overhead transfer rate (OTR) and one on the share insurance fund equity ratio projections and 2017 premium range. Neither briefing led to a vote from the board.
The OTR from the share insurance fund covers expenses related to the NCUA’s insurance-related activities. For 2017, it is set at 67.7%, a drop from the 2016 rate of 73.1%.
According to the board, it is reviewing options for improving the OTR methodology in response to comments received from a January 2016 request for comments. In its comment letter, CUNA proposed an alternative calculation that would keep the OTR in the range of 62% to 67%.
NCUA staff is expected to deliver a report with recommended changes to the board by Jan. 31.
The operating fee, charged only to federal credit unions and used to pay for the costs of regulating federal credit unions, is slated to increase by an average rate adjustment of 25.46% after a decrease the last several years. Credit unions will be charged the fee in March, and payments will be due April 17.
According to the NCUA, federal credit unions will fund 67% of the agency’s 2017 operating budget, while state-chartered credit unions will fund 33%.
As part of the second briefing, the NCUA’s Office of Examination and Insurance recommended a share insurance premium range of 3 to 6 basis points in 2017. The actual amount is required to be determined by the NCUA board before credit unions are billed.
The proposed range is only for credit union budgeting purposes, as credit unions should not actually accrue for a premium until one is approved by the NCUA board. The board will decide during 2017 whether to declare a premium.
The year-end equity ratio would likely range between 1.24% and 1.27% before any premium.