[Federal Register Volume 59, Number 124 (Wednesday, June 29, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-15804]
[[Page Unknown]]
[Federal Register: June 29, 1994]
=======================================================================
-----------------------------------------------------------------------
NATIONAL CREDIT UNION ADMINISTRATION
12 CFR Parts 701 and 741
Organization and Operation of Federal Credit Unions and
Requirements for Insurance
AGENCY: National Credit Union Administration (NCUA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Board is amending NCUA's Regulations in order to conform
them to the new NCUA Fiscal and National Credit Union Share Insurance
Fund (NCUSIF) Insurance year. The changes to the fiscal and insurance
years were approved by the NCUA Board on November 15, 1993.
EFFECTIVE DATE: July 29, 1994.
ADDRESSES: National Credit Union Administration, 1775 Duke Street,
Alexandria, Virginia 22314-3428.
FOR FURTHER INFORMATION CONTACT:
Herbert S. Yolles, Controller, Office of the Controller, at the above
address or telephone: (703) 518-6570 or Mary F. Rupp, Staff Attorney,
Office of General Counsel, at the above address or telephone: (703)
518-6553.
SUPPLEMENTARY INFORMATION: The NCUA Board on November 15, 1993, voted
to change NCUA's fiscal year and NCUSIF's insurance year to coincide
with the calendar year, effective January 1, 1995. This change requires
the NCUA to amend its regulations addressing operating fees,
capitalization deposit adjustments and insurance premiums to conform to
the calendar year.
Currently, under Sec. 701.6 of NCUA's Rules and Regulations, an
operating fee is assessed on federal credit unions based on a fiscal
year of October 1 to September 30. This section must be changed to
reflect the change to the calendar year. The change will result in a
transition quarter that begins on October 1, 1994 and ends on December
31, 1994 for which no operating fee would be assessed. Also, the
operating fee assessed as a result of a conversion or merger will now
be based on the calendar year and those sections must be changed to
delete references to the former fiscal year and reflect the new
calendar year. 12 CFR 701.6(b) (2) and (3).
Currently, under Sec. 741.11 of NCUA's Rules and Regulations, any
insurance premium and adjustments in the one percent deposit for all
federally insured credit unions are based on an ``insurance year'' of
July 1 through June 30. 12 CFR 741.11(b)(1). The definition of
``insurance year'' must be amended to reflect the change to the
calendar year. Further, the due dates for the deposit adjustment and
any premium must be changed from January 31 to a date as set by the
NCUA Board in order to coincide with the calendar year. (The Board
anticipates that the due date will be in March of each calendar year.)
12 CFR 741.11 (c), (d) and (g).
Four letters were received in response to the request for comments
in the proposed amendments. Two were from national credit union
organizations, one was from a state credit union organization and one
was from a credit union. The comments were generally favorable.
One commenter expressed concern that the NCUA Board had not
solicited comments prior to converting NCUA's fiscal year and NCUSIF's
insurance year to the calendar year. It requested an explanation of the
accounting implications, the reasoning behind the change and a
timetable for the assessments.
The accounting implications for any credit union accounting for the
fee under full accrual accounting (i.e., amortizing the fee over the
period October 1 through September 30) are that the credit union will
have a one time three month reduction. The NCUA Board believes very
few, if any, credit unions use this method. All other credit unions
will experience a one time cash flow benefit, because the next
assessment will be in March, rather than January.
Some of the more advantageous reasons for the change are to
eliminate the present confusion caused by NCUA's use of three different
operating periods: insurance year, fiscal year and calendar year; in
the unlikely event NCUA assesses another insurance premium, the change
will eliminate the massive accounting confusion experienced the last
time an insurance premium was assessed, because only one accounting
period will be involved; the change will provide for better comparison
of NCUSIF to the other depository insurance funds; the change will make
clearer the calculation of the NCUSIF equity ratio and eliminate the
current seven month lag in collecting the 1% deposit adjustment
payments, and the change will enable NCUA to obtain better information
for budgeting purposes and for pay adjustment decisions because labor
market data and projections from other regulators are not available
until September or October.
NCUA will be setting its budget in mid-October. In November, the
agency will provide federal credit unions a very close estimate of
their operating fee assessment, which may vary only slightly after the
December 31 credit union call reports are reviewed. The operating fee
and capitalization deposit adjustment payments will be due in late
March or early April.
Other budgetary issues were raised by the two national
organizations which are not directly related to the proposed changes
and will be addressed by the agency in another forum.
Regulatory Procedures
Regulatory Flexibility Act
The Regulatory Flexibility Act requires the NCUA to prepare an
analysis to describe any significant economic impact any regulation may
have on a potential number of small credit unions (primarily those
under $1 million in assets). The regulation simply repeats the
preexisting requirements of federal credit unions to pay operating fees
and federally insured credit unions to fund their one percent deposit
and pay insurance premiums if assessed, with the only modification
being the dates when these fees and premiums must be paid. Accordingly,
the NCUA Board has determined that a Regulatory Flexibility Analysis is
not required.
Paperwork Reduction Act
These amendments do not change the paperwork requirements.
Executive Order 12612
The section of the final amendment dealing with insurance premiums
applies to all federally insured credit unions. However, it makes no
substantive changes except to change the dates for certain filings and
assessments of fees. The NCUA Board has determined that this amendment
is not likely to have any direct effect on states, on the relationship
between the states, or on the distribution of power and
responsibilities among the various levels of government because
federally insured credit unions are currently required to pay an
insurance premium.
List of Subjects
12 CFR Part 701
Civil rights, Conflicts of interest, Credit, Credit unions, Fair
housing, Insurance, Mortgages, Reporting and recordkeeping
requirements, Signs and symbols, Surety bonds.
12 CFR Part 741
Bank deposit insurance, Credit Unions, Reporting and recordkeeping
requirements.
By the National Credit Union Administration Board on June 23,
1994.
Becky Baker,
Secretary of the Board.
Accordingly, NCUA amends 12 CFR parts 701 and 741 as follows:
PART 701--ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS
1. The authority citation for part 701 continues to read as
follows:
Authority: 12 U.S.C. 1752(5), 1755, 1756, 1757, 1759, 1761a,
1761b, 1766, 1767, 1782, 1784, 1787 and 1789. Section 701.6 is also
authorized by 31 U.S.C. 3717. Section 701.31 is also authorized by
15 U.S.C. 1601 et seq., 42 U.S.C. 1861 and 42 U.S.C. 3601-3610.
Section 701.35 is also authorized by 12 U.S.C. 4311-4312.
2. Section 701.6 is amended by revising paragraphs (a), (b) (2) and
(3) to read as follows:
Sec. 701.6 Fees paid by Federal Credit Unions.
(a) Basis for assessment. Each calendar year or as otherwise
directed by the Board, each Federal credit union shall pay to the
Administration for the current National Credit Union Administration
fiscal year (January 1 to December 31) an operating fee in accordance
with a schedule as fixed from time to time by the National Credit Union
Administration Board based on the total assets of each Federal credit
union as of December 31 of the preceding year or as otherwise
determined pursuant to paragraph (b) of this section.
(b) * * *
(1) * * *
(2) Conversions. A state chartered credit union that converts to
Federal charter will pay an operating fee in the year following the
conversion. Federal credit unions converting to state charter will not
receive a refund of the operating fee paid to the Administration in the
year in which the conversion takes place.
(3) Mergers. A continuing Federal credit union that has merged with
another credit union will pay an operating fee in the following year
based on the combined total assets of the merged credit union and the
continuing Federal credit union as of December 31 of the year in which
the merger took place. For purposes of this requirement, a purchase and
assumption transaction wherein the continuing Federal credit union
purchases all or essentially all of the assets of another credit union
shall be deemed a merger. Federal credit unions merging with other
Federal or state credit unions will not receive a refund of the
operating fee paid to the Administration in the year in which the
merger took place.
* * * * *
PART 741--REQUIREMENTS FOR INSURANCE
3. The authority citation for part 741 continues to read as
follows:
Authority: 12 U.S.C. 1757, 1766, and 1781-1790. Section 741.11
is also authorized by 31 U.S.C. 3717.
4. Section 741.11 is amended by revising paragraphs (b)(1), (c),
(d) and (g) to read as follows:
Sec. 741.11 Insurance premium and one per cent deposit.
* * * * *
(b) * * *
* * * * *
(1) ``Insurance year'' means the period from January 1 through
December 31.
* * * * *
(c) One Percent Deposit. Each insured credit union shall maintain
with the NCUSIF during each insurance year a deposit in an amount
equaling one percent of the total of the credit union's insured shares
as of the close of the preceding insurance year. The deposit shall be
adjusted annually on a date to be determined by the NCUA Board.
(d) Premium. Each insured credit union shall pay to the NCUSIF, on
a date to be determined by the NCUA Board, an insurance premium for
that insurance year in an amount equaling one twelfth of one percent of
the credit union's total insured shares as of the close of the
preceding insurance year.
* * * * *
(g) New Charters. A newly-chartered credit union that obtains share
insurance coverage from the NCUSIF during the insurance year in which
it has obtained its charter shall not be required to pay an insurance
premium for that insurance year. The credit union shall fund its one
percent deposit on a date to be determined by the NCUA Board in the
following insurance year, but shall not participate in any distribution
from NCUSIF equity related to the period prior to the credit union's
funding of its deposit.
* * * * *
[FR Doc. 94-15804 Filed 6-28-94; 8:45 am]
BILLING CODE 7535-01-M