ALEXANDRIA, Va.–The NCUA board has approved an increase in the asset size at which credit unions are exempt from paying an operating fee, and further indexed that exemption to growth in CU assets moving forward.
The move, which affects approximately 211 credit unions (up from the current 128), increases the exemption in the near term to CUs up to $2 million in assets from $1 million and applies to the 2024 fee cycle.
The current $1 million exemption has been in place since 2012, with NCUA staff noting total assets in CUs having doubled since that time. NCUA said the change will have no effect on the overhead transfer rate.
Prior to the vote, NCUA staff the agency received five letters in response to the proposal that was made during the June 2023 board meeting, and all expressed support. Some of those letters recommended raising the threshold even higher, agency staff said.
Harper: A ‘Welcome Change’
Given asset size growth in credit unions, NCUA Chairman Todd Harper said the adjustment is “just common sense…Indexing that threshold for inflation will provide a measure of financial assistance to these institutions, bring the threshold back into alignment with where it once was and keeps it there going forward.
Harper said the adjustment is a “positive and a welcome change for the smallest of credit unions.”
He said the change also allows NCUA to spend more time on the larger credit unions that pose greater risk to the insurance fund.
Hauptman: Small Amount, Big ‘Hassle’
“Going from a threshold of $1 million to $2 million is appropriate but may not be enough,” said NCUA Vice Chairman Kyle Hauptman. “I don’t pretend to know the perfect number. These sorts of thresholds are somewhat arbitrary. I support seeking comments from stakeholders in the near future on the possibility of increasing the threshold to $5 million. In the meantime, I am grateful this new methodology indexes the exemption threshold based on growth in federal credit union system assets.”
Hauptman noted a $1 million CU pays just $190 as an operation fee, a $2 million CU pays $380.
“So, we had to calculate a bill, send it to the right person, and then the credit union has an item on their to-do list. And of course, the credit union could be late paying the bill, which requires someone at the NCUA to follow up with the credit union. All for a max of $380,” Hauptman said, saying the elimination of the “hassle” is a good idea all around.
Eliminating all that hassle means the NCUA forgoes a maximum of $380. That seems like a good deal for all involved.
“As I have said before, the regulatory and financial burdens on small credit unions are like a death from a thousand cuts. Small credit unions must comply with the same regulations as the largest credit unions,” Hauptman said. “In some cases, the NCUA is examining them for compliance, but the regulations are the same. It’s not the small fee, it’s all the small fees – from multiple agencies – not just the NCUA. It’s not a single one-page form for compliance, it’s all the one-page forms.”
Hood: Freeing Up Resources
NCUA Board Member Rodney Hood noted that the newly exempt federal credit unions will be able to use the resources being freed up to “continue focusing on the important role they play in providing needed financial services to under-served and minority communities.”