June 22, 2023 — The NCUA Board meeting agenda consisted of three items for consideration, including a request for comment regarding NCUA’s Operating Fee Schedule Methodology, a board briefing regarding new charter modernization, and a proposed Interpretive Ruling and Policy Statement (IRPS) specific to the Minority Depository Institution (MDI) Program.
Operating Fee Schedule Methodology
As the first action item, the Board unanimously approved a notice and request for comment on revisions to the NCUA Operating Fee Schedule Methodology. In the request for comment, the Board seeks to increase the threshold at which federal credit unions are exempt from paying an operating fee from $1 million to $2 million in assets. This change would be adjusted annually for inflation. The Board is also seeking comments about whether and how the Board should modify the current three-tier Operating Fee Schedule.
Specifically, the Board is evaluating how the current methodology is regressive in that credit unions with assets exceeding $1 billion pay a lower marginal rate than those credit unions with less than $1 billion in assets. Prior to approving the notice and request for comment Board Member Hood also inquired as to whether a larger exemption threshold of $10 million had been considered vs. the $2 million. The NCUA considered the larger threshold and determined if the threshold were increased to $10 million, it would exempt 27% of federal credit unions vs. 7% if increased to an exemption of $2 million. Comments will be due 60 days from the date of publication in the Federal Register.
Board Briefing – New Charter Modernization
The Board was also briefed on the new charter modernization efforts by the Office of Credit Union Resources and Expansion (CURE). The briefing discussed the three phases of the charter process, and staff presented the significant strides made in improving the chartering process for a new credit union.
The improvements include updates to the chartering webpage and new templates and forms to help new groups seeking to organize a new credit union. Due to the various improvements, the average time to review and approve a complete application has been reduced from 564 to 130 days from start to finish. In total, there have been 29 applications received since 2018, with 14 applications approved, five currently under review, two denials, and one withdrawal. The Board was also briefed on a new provisional charter pilot program that is set to launch by the end of September 2023. For the agency to receive stakeholder feedback on the pilot program, it program will be open for a 60-day comment period upon publication in the Federal Register.
Interpretive Ruling and Policy Statement – MDI Preservation Program
Also unanimously approved were proposed changes to the IRPS on the agency’s Minority Depository Institution Preservation Program. The proposal would amend IRPS 13-1, approved by the agency on June 18, 2015. The proposed changes include:
- Incorporating recent program initiatives such as the consulting and support program for MDIs and providing examples of technical assistance an MDI may receive.
- Including subsections on engagement with MDIs, technical assistance, examination of MDIs, Community Development Revolving Loan Fund grants and loans, training and education, and preservation of MDIs.
- Establishing a new standard for MDIs to assess their designation periodically and updating how the NCUA will review an MDI’s designation status to reflect it will be part of the examination process.
- Simplifying “community it services, as designated in its charter” to refer to an MDI’s field of membership.
- Specifying that “Asian American” includes Native Hawaiian or Other Pacific Islander, and “Native American” includes American Indian and Alaska Natives.
- Clarifying that “small entity” means a “small credit union” as defined by the NCUA and the simplified process for a small credit union to determine whether it qualifies as an MDI.
- Adding new sections that address comments to the agency, the agency’s annual congressional reporting on MDIs, and the availability of the list of MDIs from the NCUA website.
Comments on the changes to the IRPS will be due 60 days from the date of publication in the Federal Register.