NCUA Board Member Rodney E. Hood Statement on the Operating Fee Methodology Schedule

As Prepared on Delivery on December 14, 2023

Thank you, Chairman Harper. And thank you, Jim and Todd, for your presentation today. I am absolutely delighted as we are finalizing the changes to the Operating Fee Schedule methodology today.

As most of you are aware, the NCUA’s operating budget is funded through two sources. A portion is paid through transfers from the National Credit Union Share Insurance Fund using the overhead transfer rate, and the rest is paid through operating fees collected directly from federal credit unions.

The action before us today will raise the exemption for which a fee is not charged for federal credit unions from one million to two million dollars. So, that means that now a total of 211 federal credit unions will be exempt from this requirement to pay an operating fee for the NCUA, which is over a 70 percent increase from the number of exempted federal credit unions last year. Instead of paying the operating fee, these small federal credit unions can now use those resources to continue focusing on the important role they play in providing needed financial services to underserved and minority communities.

In my service on the NCUA Board, first as chairman and now as a board member, I’ve made such common-sense regulatory changes my top priority and today’s action is another positive step in providing relief to smaller credit unions.

With that, I do have a few quick questions:

Some of the public comments that came in on the proposed revisions to the Operating Fee Methodology requested clarification that the changes we are approving today will not have an impact on the overhead transfer rate, which, as we mentioned, is the second source that funds the NCUA’s operating budget. Since those two are separate and unique methodologies, can you clarify that today’s change will not directly result in a change to the OTR methodology?

Thank you, and I like the fact that we are also approving the indexing of the asset threshold for fee exemptions in future years to the aggregate rate of growth in federal credit union assets. Can you clarify that this is intended solely for positive asset growth, and that it doesn’t apply in the unlikely event of a decline in total assets in the federal credit union industry?

And one more point of clarification: this calculation is based on federal credit union asset growth, not the industry as a whole, correct?

Very well, I have no further questions, and I will be supporting today’s final notice. Thank you, and back to your Chairman Harper.