Who pays for OTR

State CUs paying more for OTR, analysis shows

Jan. 15, 2016 -- In the period 2013-16, federally insured, state-chartered credit unions (FISCUs) paid more for their portion of NCUA’s insurance cost than federally credit unions, an analysis by NASCUS of numbers from NCUA regarding the overhead transfer rate (OTR) shows.

The NASCUS analysis indicates that, over the time period, NCUA shifted a substantial portion of its expenses to the insurance fund, enabling the agency to reduce operating fees for FCUs (by nearly $15 million), despite increases totaling $49 million in NCUA’s operating expenses over the same period.

FISCUs saw their portion of NCUA’s insurance cost rise each year during the period, accumulating to $33.3 million over the time period. FCUs also saw their portion of the insurance cost rise, but by about $31 million. (See chart.)
NASCUS leader Lucy Ito recommended that state regulators and credit unions keep these points in mind as they consider responses to NCUA’s call for comments on the OTR methodology, which is scheduled to be considered at the Thursday (Jan. 21) NCUA Board meeting.

“In our view, the OTR has become an inequitable distribution, favoring the FCU over the state charter by lowering FCU operating fees and reallocating a significant portion of the expense related to FCU supervision to the NCUSIF, which is also funded by state-chartered credit unions,” Ito said.

“If the dual-chartering system is to thrive – and we know it should -- that favoritism must come to an end. The state system can help ensure that by letting its voice be heard during the upcoming comment period on the OTR.”

OTR resources
Higher-res version of chart