The NCUA board unanimously voted Friday to issue a request for comment on revising the overhead transfer rate (OTR) methodology, as well as a proposed rule on corporate credit unions. CUNA is currently analyzing the proposed OTR changes.
“CUNA has long requested NCUA open the OTR methodology to comment, so we appreciate NCUA’s decision. We urge credit unions make their voices heard during the comment period,” said Elizabeth Eurgubian, CUNA’s deputy chief advocacy officer. “Our ultimate goal is to see a process that ensures fairness to state and federal credit unions for the allocation of legitimate insurance-related costs, and we plan to submit a detailed comment letter outlining ways that can be achieved.”
The proposed formula applies the following principles to the allocation of agency operating costs:
If the methodology and allocation are adopted for 2017, the OTR will drop to 60% from the current 67.7%. However, this would increase the operating fee, paid only by federal credit unions, by about 24%. The operating fee saw an approximate 24% increase last year.
The proposed rule on corporate credit unions incorporates “generally accepted accounting principles GAAP equity acquired in a merger” as a component of retained earnings. In turn, this affects the definition of “Tier 1 capital,” which includes retained earnings as one of the components of Tier 1 capital.
The proposal also:
Additional details can be found on CUNA’s Removing Barriers Blog.
Click here for coverage of 3 final rules approved by the board at Friday’s meeting.