Report notes agency working on OTR improvements

March 13, 2017 -- Improvements to the overhead transfer rate (OTR), and the federal credit union operating fee, are being determined by NCUA based on remarks received in last year’s comment period on the two key funding mechanisms for its budget, NCUA reports in its 2016 Annual Report, released by the agency today.

“At this time, we are reviewing these comments and determining what improvements to the Overhead Transfer Rate and the Federal Credit Union Operating Fee can be made to ensure they are implemented in a fair and equitable manner to all federally insured credit unions,” the report states. The report also notes that the call for comments was issued “in response to stakeholder requests for greater transparency.”

The report also highlights the comment period on the OTR and operating fee as among the agency’s accomplishments. Under “providing greater transparency,” the report states that the effort was aimed at “improving the public’s understanding of the agency’s” OTR.

The report also specifically comments on efforts related to state supervisory agencies. Regarding use of new information technology systems, the report notes that NCUA will analyze systems used by state regulators, “and other financial regulators,” to determine “if an off-the-shelf commercial application can meet our needs, and begin laying the groundwork for procuring new applications and systems.”

With regard to providing regulatory relief, the report states the agency will continue applying its “Exam Flexibility Initiative,” and will be “making additional improvements in the way NCUA coordinates examinations with state supervisory authorities, among other areas.”

Additionally, the NCUA 2016 report lists a series of “challenges ahead” for the agency and credit unions, including:

  • Cybersecurity threats: “With credit unions and other small financial institutions increasingly targeted, NCUA must continue to strengthen the resiliency of individual credit unions, the entire system and the agency.”
  • Whether to charge a share insurance fund premium: “In making such decisions, NCUA will remain mindful of how a premium would a affect the bottom line of credit unions, while assessing the desirability of maintaining the fund at its full normal operating level during times of strong credit union system performance.”
  • Helping small credit unions: “NCUA will continue to provide assistance and seek additional ways to support the many small, low-income and minority depository institutions that provide access to affordable financial services for the middle class and people of modest means.
  • Closing the Temporary Corporate Credit Union Stabilization Fund (TCCUSF): “The Stabilization Fund is set to expire in 2021. Prior to that time, NCUA will adopt plans for the fund’s smooth closure, as well as reach a decision on the disposition of the securities that back the NCUA Guaranteed Notes.”


NCUA 2016 Annual Report