Dear Boards of Directors and Chief Executive Officers:
In December, the NCUA Board unanimously approved a new budget. As a result of that decision and other factors, federal credit union operating fees will decrease by an average of 23.7 percent in 2022.
Approximately half of the 2022 operating fee reduction results from the NCUA Board applying a $15 million credit to amounts that would otherwise be due to support the approved 2022 Operating and Capital budgets. The $15 million credit comes from previously collected operating fees that remained unspent at the end of 2021. The remaining reduction to the 2022 operating fee results from a 2021 budget surplus that was used to offset the 2022 budget, growth in reported credit union system assets in 2021, and a slight increase to the share of the Operating Budget funded from the Share Insurance Fund through the Overhead Transfer Rate (OTR) methodology.
The enclosed 2022 Operating Fee Schedule will help you calculate the exact amount of your credit union’s 2022 operating fee. The enclosure includes a web link to the NCUA’s online calculator. If your credit union owes an operating fee, it will be due no later than Friday, April 15, 2022.
The remainder of this letter provides additional insight to the operating fee calculation and payment options.
How does the $15 million credit toward the 2022 operating fee impact my credit union’s invoice?
The Board Action Memorandum (opens new window) approved on December 16, 2021, includes a table that illustrates how the projected 2022 operating fee is calculated. On that table, the $15 million credit is applied to the total amounts the NCUA anticipates collecting in 2022 from federal credit unions. This means that each credit union’s share of the $15 million will be proportional to the computed average assets used to calculate the operating fee due. The $15 million credit reduces the 2022 amount due from each credit union by 12.1 percent. In March 2022, the NCUA will provide individual invoices that will include the specific dollar amount by which each credit union’s operating fee has been reduced.
What is the timeline for operating fee invoices and other amounts due?
In March 2022, federal credit unions with total assets greater than $1 million will receive an invoice for their 2022 operating fees. Your credit union’s 2022 operating fee will be based on a four-quarter average of total assets reported as of September 30, 2021; June 30, 2021; March 31, 2021; and December 31, 2020. The operating fee exemption continues to apply to federal credit unions with total assets of $1 million or less.1
Concurrently, all federally insured credit unions will be notified of any adjustments needed to maintain their Share Insurance Fund capitalization deposits at one percent of insured shares, as required by the Federal Credit Union Act. Your credit union’s capitalization deposit may be adjusted up or down, based on insured shares reported as of December 31, 2021.
For federal credit unions, the NCUA will combine your operating fee and capitalization deposit adjustment into a single invoice. Payment will be due no later than April 15, 2022.
How do I make the payment to the NCUA?
All federally insured credit unions are encouraged to participate in the Pay.gov (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) direct debit program. To enroll, please complete the Authorized Electronic Transfer Payments form, which can be found on ncua.gov, and email the form to email@example.com. Once enrolled, credit unions will continue to receive invoices by mail. Payments will be drafted automatically on the due date; no further action is required.
Federally insured credit unions that do not participate with the Pay.gov (opens new window) (You will be leaving NCUA.gov and accessing a non-NCUA website. We encourage you to read the NCUA's exit link policies. (opens new page).) direct debit program must submit payments to the NCUA in accordance with the instructions provided with the invoice and no later than Friday, April 15, 2022.
What are the main factors affecting the operating fee?
Four major factors contributed to the 23.7 percent average decrease in the 2022 operating fee rates:
- a credit of $15 million applied by the NCUA Board to operating fee amounts due;
- a 2021 budget surplus of $23 million that was used to offset the 2022 budget;
- growth in average reported credit union assets of 16.3 percent in 2021; and
- the change in the computed OTR between 2021 and 2022.
Each year, the NCUA uses the OTR to determine how much of the NCUA’s operating budget is funded by the Share Insurance Fund. The OTR is derived from estimates of the NCUA’s resources that will be used for insurance-related functions. Generally, if the OTR increases, the operating fee revenue collected from federal credit unions decreases, and vice versa.
For 2022, the OTR increased to 62.7 percent, a change of 40 basis points compared to the 62.3 percent level in 2021. This change results in a reduction to the estimated 2022 operating fee revenue compared to the 2021 operating fee collections. Additional discussion of the OTR and detailed information about the NCUA budget are available on the Budget and Supplementary Materials page of the NCUA website.
To preserve the relative relationship of the operating fees paid by federal credit unions with different levels of reported assets, the range for each operating fee tier has been adjusted by the computed growth in federal credit union total assets, net of all reported Paycheck Protection Program (PPP) loans, using the average of the same four quarters’ Call Report data used to compute your credit union’s operating fee. You will see the new asset ranges to the right of the adjusted fee rates on the enclosed chart.
If you have any questions about your credit union’s operating fee, please contact the NCUA’s Office of the Chief Financial Officer at firstname.lastname@example.org.
Todd M. Harper
1 Based on an average of $1 million or less in total assets computed using the prior four-quarters’ Call Report data.