At NCUA brief­ing, CUS ask when will bud­get in­creases fi­nally stop?

Though there was praise for the agency’s cost-cut­ting ef­forts and the op­por­tu­nity to dis­cuss its bud­get, in­dus­try stake­hold­ers still voiced a num­ber of con­cerns, as well.

Credit Union Journal - - Regulation - BY BRIAN COLLINS

THE NA­TIONAL CREDIT UNION AD­MIN-is­tra­tion Board gave in­dus­try stake­hold­ers an op­por­tu­nity to sound off on the agency’s pro­posed bud­get for 2018, which calls for yet an­other slight in­crease for the 10th year in a row.

Those who tes­ti­fied dur­ing the brief­ing were quick to thank the reg­u­la­tor for giv­ing them the op­por­tu­nity to speak out on the is­sue, but they were just as quick to call at­ten­tion to con­cerns with the pro­posed $321 mil­lion bud­get, up 0.9 per­cent from 2017.

The new bud­get in­cludes a re­duc­tion in 42 full-time po­si­tions. Yet pay and ben­e­fits will in­crease $6.3 mil­lion or 2.9 per­cent to $220.8 mil­lion. NCUA will con­tinue to have 1,118 full-time em­ploy­ees on its pay­roll.

The bud­get also in­cludes a sig­nif­i­cant de­cline in charges to the Na­tional Credit Union Share In­sur­ance Fund. Di­rect charges to the in­sur­ance fund are ex­pected to to­tal $7.4 mil­lion in 2018, down from $10.1 mil­lion in the cur­rent year.

“The de­cline is pri­mar­ily due to a re­duc­tion in con­trac­tor sup­port for credit union stress test­ing,” ac­cord­ing to NCUA’S bud­get brief­ing doc­u­ment. “Di­rect charges within the bud­get in­clude ad­min­is­tra­tion of the NCUA Guar­an­teed Notes pro­gram, state ex­am­iner and lap­top leases, as wells as fi­nan­cial au­dit sup­port.”

The agency also is planning to close two re­gional of­fices in At­lanta and Al­bany, N.Y., which will re­duce ex­penses.

The Credit Union Na­tional As­so­ci­a­tion said it be­lieves NCUA’S spend­ing lev­els are too high, but it is clear the reg­u­la­tor is “try­ing to in­crease ef­fi­ciency while im­prov­ing op­er­a­tions and in­ter­ac­tions with credit unions,” ac­cord­ing to CUNA Econ­o­mist Mike Schenk.

“As a con­se­quence, we think the pro­posed in­vest­ments in cap­i­tal, sys­tems and tech­nol­ogy will lead to fur­ther im­prove­ment in ef­fi­ciency, and lead to lower staffing lev­els and ad­di­tional re­lief for thou­sands of credit unions un­der NCUA’S su­per­vi­sion,” he told Mcwat­ters and Mets­ger.

How­ever, Schenk noted that salary in­creases for ex­am­in­ers and su­per­vi­sors are ris­ing faster than for credit union em­ploy­ees. But he wel­comed NCUA’S de­ci­sion to re­duce its su­per­vi­sory re­gions from five to three, call­ing it “com­mend­able” since it re­duces the need for of­fice space. He also urged the board to move ahead with a pro­posal to redesign ex­am­i­na­tions with re­mote com­po­nents .

Money One Fed­eral Credit Union CEO Bev­erly Zook, speak­ing on be­half of the Na­tional As­so­ci­a­tion of Fed­er­ally-in­sured Credit Unions, noted that NCUA has pro­posed an in­crease its bud­get for the tenth year in row.

“The in­dus­try ap­pre­ci­ates that NCUA has be­gun to slow the rate of year-over year bud­get growth,” she said, as the pro­posed 2018 in­crease to the agency’s op­er­at­ing fund is only 2.1 per­cent, but added that the num­ber of in­sti­tu­tions the reg­u­la­tor over­sees has de­clined by 25 per­cent over the past decade. “Credit unions are look­ing for­ward to a time where we see a de­crease in the bud­get,” she said.

Paul Gen­tile, pres­i­dent and chief ex­ec­u­tive of the Co­op­er­a­tive Credit Union As­so­ci­a­tion, the league serv­ing Delaware, Mas­sachusetts, New Hamp­shire and Rhode Is­land, noted the im­ple­men­ta­tion of the 18-month exam sched­ule for highly rated CUS has al­lowed the agency to make staffing cuts. “Credit unions should get the ben­e­fit of economies of scale,” Gen­tile said, adding that the “num­ber of ex­am­in­ers should not go up as a credit union’s as­sets in­crease.”

Na­tional As­so­ci­a­tion of State Credit Union Su­per­vi­sors CEO Lucy Ito brought up a peren­nial con­cern among state char­ters: the over­head trans­fer rate. At its height, she said, the OTR com­prised 73 per­cent of NCUA’S op­er­at­ing ex­penses in 2016 and then was re­duced to 67 per­cent this year with a 24 to 25 per­cent in­crease in the fed­eral credit union op­er­at­ing fee.

If NCUA goes for­ward with its OTR pro­posal, the rate could be re­duced to around 60 per­cent in 2018 and the fed­eral credit union op­er­at­ing fee would go up by an es­ti­mated 24 per­cent.

While that rep­re­sents two sig­nif­i­cant in­creases to the op­er­at­ing fee, Ito noted, this comes af­ter eight years dur­ing which fed­er­ally char­tered CUS en­joyed a 30 per­cent de­crease in the op­er­at­ing fee. In­deed, she said, if you look back to 2008, the in­crease is ac­tu­ally 18 per­cent over the 10-year pe­riod.

Ito said set­ting OTR at 60 per­cent, as NCUA has sug­gested, would be a sig­nif­i­cant step in the right di­rec­tion.

“I do want to thank you again for res­ur­rect­ing the pub­lic bud­get brief­ing process, and for tak­ing a close look at the OTR method­ol­ogy and com­ing up with some­thing that is more trans­par­ent and more un­der­stand­able and more eq­ui­table,” Ito told the board mem­bers.

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.