ALEXANDRIA, Va. (11/21/14)--The National Credit Union Administration modified the overhead transfer rate (OTR) to 71.8%, up from the current 69.2%, at its monthly board meeting Thursday.
The overhead transfer is one of the funding sources for the NCUA's budget, applied to monthly incurred expenses, and does not affect the amount of the budget.
Annual changes to the OTR are based on a methodology that was approved by the NCUA board in November 2003. The methodology considered the following key factors:
The Credit Union National Association has urged the NCUA to refine its methodology related to the OTR to provide additional clarity.
The rate represents insurance-related costs in the agency's operating budget to be paid for out of the NCUSIF. The rate set at 71.8% means that 71.8% of the budget will be paid out of the NCUSIF, and the remaining 28.2% will be paid for through the federal credit union operating fee.
The operating fee is based on federal credit unions based on Dec. 31, 2014 year-end assets. Credit unions with less than $1 million in assets are not assessed an operating fee. According to the NCUA's call report data from June 2003, annual growth is projected to be 3.8% at year's end.
The fee rate was decreased in part to the July board action to reduce the 2014 operating budget by $1.1 million.
Aside from a minor increase in 2013 the operating fee rate has declined four of the last five years. Last year it was reduced 18%, said Mary Ann Woodson, chief financial officer for the NCUA.
CUNA commends the NCUA's decision for the operating fee to remain at no more than one month's expenses of the agency.
The NCUA also estimated that the NCUSIF assessment for 2015 will be between zero and five basis points, and said there will not be an assessment for the Temporary Corporate Credit Union Stabilization Fund in 2015.