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NCUA Board Adopts New OTR Methodology and Sets Budget
Friday, November 17, 2017 6:40 AM

The National Credit Union Administration Board met for its November open board meeting, during which the board adopted new overhead transfer rate methodology, approved the agency's 2018 and 2019 budgets, finalized its rule on corporate credit unions, and provided a quarterly report of the Stabilization Fund.

Overhead Transfer Rate Methodology
The Overhead Transfer Rate (OTR) represents insurance-related costs in NCUA's operating budget. The revised methodology cuts the current eight-step calculation to three steps and reduces the resources needed to administer the OTR. The new methodology also eliminates the examination time survey. Under this new methodology, the 2018 Overhead Transfer Rate would be 61.5 percent compared to 67.7 percent in 2017. 

2018–2019 Operating Fund Budget
The Board finalized the 2018 budget of $292.1 million and 2019 budget of $302.7 million. The 2018 operating budget includes a net decrease of 42 fulltime-equivalent positions and a 2.1 percent budget increase from 2017. The 2019 operating budget includes a net decrease of 14 fulltime-equivalent positions and a budget increase of 1.5 percent from 2018. Although it shows an increase in spending, the budget also shows the agency is working toward slowing the pace of future increases. 

Corporate Credit Union Final Rule
The NCUA Board approved a final rule to clarify the minimum retained earnings requirement for corporate credit unions. The rule does not alter existing standards for prompt corrective action and does not change regulations on authorized investments, concentration risk limits, and maturity limits or other limitations on corporate investment activities. The rule is effective thirty days after publication in the Federal Register.

Quarterly Report of the Stabilization Fund
The Stabilization Fund's net income was $570.6 million, increasing the Fund's net position to $2.6 billion for the quarter ending Sept, 30, 2017. The increase in the Fund's net income was due primarily to a partial recovery of the $1 billion capital note from the asset management estate of U.S. Central Federal. The increase in the Stabilization Fund's net position resulted in a $37.8 million reduction in the provision for insurance losses. Also contributing to the Fund's net income was a $43.6 million reduction in the provision for insurance losses and $5.6 million in guarantee fee income for the third quarter.

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