ARLINGTON, Va.—In response to the NCUA's notice of proposed rulemaking on fees paid by credit unions, NAFCU has responded with general support, saying it "provides greater certainty to federal credit unions (FCUs) on operating fees owed and accurately portrays total assets."
As proposed, the rule would exclude any loan an FCU reports under the Paycheck Protection Program (PPP) or similar future programs from total assets.
Of note, the rule would also amend the period used for the calculation of an FCU’s total assets to the average total assets reported on the FCU’s previous four call reports, reducing the risk the NCUA under- or over-collects operating fees relative to the board-approved budget and providing more certainty to FCUs about the operating fee charges for the forthcoming year.
"In assessing an operating fee to fund the NCUA’s budget, it is imperative that the agency continue to operate in a fiscally prudent manner to alleviate any waste and ensure FCUs are not being over-charged," wrote Kaley Schafer, NAFCU's senior regulatory affairs counsel. "In a January 2020 letter to credit unions regarding the operating fee schedule adjusted for the year, the operating fees assessed were 1.13% higher than the previous year which the agency attributed to increased cash needs for capital investments planned for 2020 as well as the increased budget level."
Schafer repeated the association's previous call, noting that the agency "must consider the difficulties FCUs are facing and their ability to pay operating fees."
Reducing Fluctuations
Additionally, Schafer shared that the proposal would reduce seasonal fluctuations, a benefit for FCUs that experience a higher seasonal fluctuation during the fourth quarter each year and FCUs that have experienced an abnormal fluctuation since the pandemic started.
"Using total assets from the four most recently reported quarters may alleviate some of the concerns of incurring a higher than normal operating fee due to a short-term increase in deposits," wrote Schafer. "Moreover, the proposed four-quarter calculation seems to be a more accurate measure of a FCUs total assets."
NAFCU noted it has previously questioned the agency’s principles-based OTR methodology adopted in 2017.