EI/SJS:asw
SSIC: 2160
DATE: January 12, 2026
TO: Office of the Board
FROM:
Acting Director Amanda Parkhill
Office of Examination and Insurance
SUBJECT: 2026 Overhead Transfer Rate (OTR) Summary
The Federal Credit Union Act authorizes NCUA to expend funds from the National Credit Union Share Insurance Fund (Share Insurance Fund) for administrative and other expenses related to federal share insurance (12 U.S.C. §1783). An overhead transfer from the Share Insurance Fund covers the expenses associated with insurance-related functions of NCUA’s operations.
At its November 16, 2017, Board meeting, the NCUA Board approved a simplified principles-based methodology for calculating the OTR. The OTR formula is based on the following underlying principles to allocate agency operating costs:
- Time spent examining and supervising federal credit unions is allocated as 50 percent insurance related.1
- All time and costs NCUA spends supervising or evaluating the risks posed by federally insured, state-chartered credit unions, or other entities not chartered or regulated by NCUA (for example, third-party vendors and CUSOs) is allocated as 100 percent insurance related.2
- Time and costs related to NCUA’s role as charterer and enforcer of consumer protection and other non-insurance-based laws governing the operation of credit unions (like field of membership requirements) are allocated as 0 percent insurance related.3
- Time and costs related to NCUA’s role in administering federal share insurance and the Share Insurance Fund are allocated as 100 percent insurance related.4
These four principles are applied to the activities and costs of the agency to arrive at the portion of the agency’s Operating and Capital Budget to be charged to the Share Insurance Fund.
OTR Results for 2026
Based on the Board-approved methodology, the Overhead Transfer Rate (OTR) for 2026 is calculated at 61.8 percent, a slight increase from 61.7 percent in 2025—a change of just 10 basis points.
While both total Operating and Capital Budget dollars and insurance-related costs decreased from the prior year’s analysis, the denominator (total Operating and Capital Budget) declined by slightly more than the numerator (insurance related costs). This is attributable to a small increase in the percentage of insurance-related work for the Office of Credit Union Resources and Expansion’s (CURE).
Distribution of Operating and Capital Budget Costs
The OTR represents insurance-related costs in NCUA’s Operating and Capital Budget to be paid from the Share Insurance Fund; thus, 61.8 percent of the total Operating and Capital Budget will be paid from the Share Insurance Fund. The remaining 38.2 percent of the Operating and Capital Budget will be paid for through the FCU Operating Fee.
Thus, the explicit and implicit distribution of total Operating and Capital Budget costs for FCUs and FISCUs is as follows:
| Portion of Operating Budget covered by: | FCUs | FISCUs |
|---|---|---|
| FCU Operating Fee | 38.2% | 0.0% |
| OTR x Percent of Insured Shares | 31.6% (61.8% x 51.2%) | 30.2% (61.8% x 48.8%) |
| Total5 | 69.8% | 30.2% |
Totals may not reconcile due to rounding.
Calculation of the 2025 Overhead Transfer Rate
| Workload Programs 2025 Data | (A) Budgeted Workload Hours | (B) Percent Insurance- Related | (A) x (B) Insurance-Related Workload Hours | Allocation Basis |
|---|---|---|---|---|
| Federal Credit Union Examination and Supervision | 415,430 | 50% | 207,715 | Based on allocation principle 1 reflecting NCUA’s roles as both prudential regulator and insurer. |
| State Credit Union Exam & Supervision | 178,885 | 100% | 178,885 | Based on allocation principle 2 reflecting NCUA’s role as insurer. |
| Consumer Compliance Reviews & Related Training | 0 | 0% | 0 | Based on allocation principle 3 reflecting NCUA’s role as prudential regulator. |
| Field of Membership & Chartering | 0 | 0% | 0 | Based on allocation principle 3 reflecting NCUA’s role as charterer. |
| CUSO and Third-party Vendor Reviews | 0 | 100% | 0 | Based on allocation principle 2 reflecting NCUA’s role as insurer. Field staff time conducting reviews of CUSOs and third-party vendors – NCUA does not charter or regulate CUSOs and third-party vendors. |
| Total | 594,315 | N/A | 386,600 | N/A |
Total Insurance-Related Workload Hours to Total Workload Hours: 65.05% - Weighted average of field staff program time devoted to NCUA’s role as insurer.
NOTE: The totals may not reconcile exactly due to rounding.
| Cost Area | (A) Operating Budget $Millions | (B) Percent Insurance- Related | (A) x (B) Operating Cost to be Borne by the Share Insurance Fund $Millions |
|---|---|---|---|
| Regions and ONES The financial budget for the agency’s five regional offices and ONES is allocated based on the weighted average of insurance-related activities calculated from the workload budget using principles 1, 2, and 3 in Step 1. Resources in the regions and ONES execute NCUA’s examination program. Thus, the budgeted costs related to these programs should receive the same allocation basis as the programs themselves. | $152.1 | 65.05% | $98.9 |
| Asset Management Assistance Center Manages liquidation payouts and assets acquired from liquidations on behalf of the Share Insurance Fund. Thus, the OTR allocation factor is based on principle 4 and allocated at 100 percent insurance related. | $6.2 | 100.00% | $6.2 |
| Office of Consumer Financial Protection This office is responsible for all functions related to consumer compliance, financial protection, and member education. These activities are allocated based on principle 3 as 0 percent insurance related. The office does some work with respect to federally insured state-chartered credit unions, including share insurance coverage matters, in NCUA’s role as insurer; these activities are allocated based on principle 4 as 100 percent insurance-related. The net of this combined activity results in an OTR allocation factor of 2.96 percent insurance related. | $7.8 | 2.96% | $0.2 |
| CURE Processes charter applications and field of membership expansion requests. Provides consulting and training services for both federal credit unions and federally insured state-chartered credit unions. Also processes grants and loans for federally insured credit unions. Principle 1 is applied to the office’s work with federal credit unions and principle 2 is applied to the office’s work with federally insured state-chartered credit unions. Principle 3 is applied to the office's work related to chartering and field of membership. The net of this combined activity results in an OTR allocation factor of 29.53% insurance related. | $8.6 | 29.53% | $2.5 |
| Subtotal The 61.8 percent subtotal factor represents the dollar-weighted average of the above four cost centers (Regions and ONES, Asset Management Assistance Center, Office of Consumer Financial Protection, and CURE) representing specific aspects of NCUA’s mission. | $174.6 | 61.79% | $107.9 |
| All Other Offices This category includes the offices that design or oversee the agency’s mission and its related offices or provide necessary support to mission offices or the entire agency. As such, the proportion of insurance-related activities for these offices correspond to that of the mission offices. Therefore, these office costs are allocated based on the weighted average of insurance-related activities calculated in the subtotal above. | $138.2 | 61.79% | $85.4 |
| Total | $312.8 | 61.79% | $193.3 |
NOTE: Numbers may not reconcile exactly due to rounding.
| Description | Amount |
|---|---|
| Operating Costs to be Borne by the Share Insurance Fund | $193.3 |
| ÷ Total Operating Budget | $312.8 |
| = OTR | 61.8% |
Footnotes
1 The 50 percent allocation mathematically emulates NCUA’s dual role on each examination (that of regulator and that of insurer). It reflects an equal sharing of supervisory responsibilities between NCUA’s roles as charterer/prudential regulator and insurer given both roles have a vested interest in the safety and soundness of federal credit unions. NCUA’s resource budget reflects the total hours needed to provide the oversight responsibility of both its regulator and insurer roles.
2 NCUA does not charter state-chartered credit unions or serve as their primary regulator. NCUA’s role with respect to federally insured, state-chartered credit unions is insurer. Therefore, all examination and supervision work and other agency costs attributable to federally insured, state-chartered credit unions is allocated as 100 percent insurance related.
3 As the federal agency with the responsibility to charter federal credit unions and enforce non-insurance related laws governing how credit unions operate in the marketplace, NCUA resources allocated to these functions are properly assigned to its role as charterer/prudential regulator.
4 NCUA conducts liquidations of credit unions, insured share payouts, and other resolution activities in its role as insurer. Also, activities related to share insurance, such as answering consumer inquiries about insurance coverage, are a function of NCUA’s role as insurer.
5 Totals may not reconcile due to rounding.