WASHINGTON–CUNA has sent a letter to NCUA regarding now it determines its operating fee, with a specific focus on not counting PPP loans toward CU assets.
The agency has put out for comment a proposal that would amend its rules to use the average of an FCU’s four most-recently reported quarterly assets to calculate operating fees and to make conforming amendments to the regulatory text to ensure this same approach is applied to merged and recently converted FCUs.
NCUA is proposing to use an average of total assets, stating that doing so will reduce the effect of seasonal fluctuation in the total assets of FCUs and will provide more certainty to FCUs about their operating fee charges for the forthcoming year.
“We support the proposed change to a four-quarter average of reported assets in calculating the operating fee. We agree with the agency that this change will address seasonality and provide greater certainty of upcoming operating fees,” CUNA wrote. “Further, this change would reduce the risk that the NCUA will collect less in operating fee revenue than it requires if actual assets reported in FCUs’ December Call Reports are below the asset growth assumption used to set the operating fee rates in the budget.”
But CUNA also has a proposal of its own.
“While we support the proposed change to a four-quarter average, we ask the NCUA to regularly review this change and its impact to ensure it does not cause any unintended consequences, such as a significant and/or inaccurate change in the annual operating fee,” CUNA stated.
PPP Exclusion
In addition, CUNA is calling on NCUA to exclude PPP loans from total assets, in whatever form held on the books, so as to save a credit union from being subjected to a higher operating fee. Otherwise, “this may impose a burden for participation in this program, or a disincentive to participate now that the program has been extended. As the PPP serves an important public purpose, the NCUA believes PPP loans warrant exclusion from total assets when determining operating fees to avoid these harms.”
In addition to excluding PPP loans from an FCU’s total assets for purposes of calculating its operating fee, CUNA noted that due to the possibility of additional economic stimulus through similar programs, NCUA’s proposal would incorporate a general statement in the regulation that contemplates the NCUA’s exclusion of loans made under programs similar to the PPP from total assets when calculating operating fees.
“We support this proposed provision, as we agree it would provide the NCUA with flexibility to consider excluding assets related to future programs that may develop on short notice, particularly in cases where including such assets may create a disincentive for FCUs to participate,” CUNA wrote.