NCUA Chairman Todd M. Harper Statement on the Final Notice on the Operating Fee Schedule Methodology

As Prepared for Delivery on December 14, 2023

Thank you, Jim and Todd, for your presentation and for your team’s work in bringing this final notice on revising the NCUA’s operating fee methodology before the NCUA Board. Todd, I understand that this is your first time presenting at a Board meeting. Welcome!

In June, the Board proposed to increase the threshold below which federal credit unions are exempt from paying an operating fee. Raising the threshold from the existing $1 million to the proposed $2 million would keep pace with the asset growth that has occurred within the credit union system since the Board established the current exemption level eleven years ago. And, the change would increase the number of federal credit unions eligible for the exemption from 128 credit unions to 225 credit unions.

Additionally, the proposal would allow the NCUA to adjust the exemption threshold for inflation annually going forward. That’s just common sense. Accordingly, the NCUA would alter the exemption threshold by the percentage by which average quarterly assets reported for federal credit unions for the most-current four quarters have increased compared to the previous four quarters, using the Call Report data available at the time the NCUA budget is published.

Today, the NCUA Board will approve those proposed changes as presented. Raising the operating fee exemption threshold to $2 million and 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 keep it there going forward. And, as I said when this rule was proposed, that’s both a positive and welcome change for the smallest credit unions.

Changing the exemption threshold will not affect the total revenue collected through the operating fee. Instead, the change modestly shifts the fee’s allocation from federal credit unions with the smallest amount of assets to federal credit unions with the largest amount of assets. This modest change, too, makes sense, as larger credit unions pose greater risks for the National Credit Union Share Insurance Fund. Because of this potential risk to the fund, NCUA’s examiners spend more time examining and supervising these larger institutions.

In sum, these changes to the operating fee methodology balance the resources needed by the NCUA to carry out its mission with ensuring equity across federal credit unions. Thank you again, Jim and Todd, for the work of you and your teams. I have no questions and now recognize Vice Chairman Hauptman.