[Federal Register Volume 60, Number 122 (Monday, June 26, 1995)]
[Proposed Rules]
[Pages 32925-32926]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15494]



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NATIONAL CREDIT UNION ADMINISTRATION

12 CFR PART 701


Fees Paid By Federal Credit Unions

AGENCY: National Credit Union Administration (NCUA).

ACTION: Request for comments.

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SUMMARY: The NCUA Board is considering a restructuring of the operating 
fee scale for natural person federal credit unions. It is proposing 
that all such credit unions with assets of $500,000 and less be exempt 
from paying any operating fee. In addition, it is proposing that all 
natural person federal credit unions with assets over $500,000 but 
equal to or less than $750,000 pay a minimum operating fee of $100.

DATES: Comments must be postmarked or posted on NCUA's electronic 
bulletin board by August 25, 1995.

ADDRESSES: Mail comments to Becky Baker, Secretary of the Board, 
National [[Page 32926]] Credit Union Administration, 1775 Duke Street, 
Alexandria, Virginia 22314-3428. Post comments to Ms. Baker on the 
bulletin board by dialing 703-518-6480.

FOR FURTHER INFORMATION CONTACT: Jane A. Walters, Controller, or Ron 
Aaron, Deputy Controller, at the above address, telephone (703) 518-
6570.

SUPPLEMENTARY INFORMATION: In 1990, NCUA restructured the operating fee 
scale for natural person federal credit unions because it was felt the 
scale did not give due consideration to the ability of such credit 
unions to pay. The restructuring was a consolidation of the scale from 
14 rate brackets to 2 rate brackets. In addition to the rate brackets, 
credit unions with assets greater than $50,000 but equal to or less 
than $371,885 paid a minimum fee of $100, and credit unions with assets 
equal to or less than $50,000 paid no fee. In 1992, a third rate 
bracket was added for credit unions exceeding $1 billion in assets.
    The scale is indexed to and adjusted annually for projected asset 
growth in federal credit unions. Presently, the operating fee scale is 
as follows:

------------------------------------------------------------------------
                 Total assets                                           
----------------------------------------------      Assessment rate     
           Over             But not more than                           
------------------------------------------------------------------------
$0........................             50,000  $0.00.                   
$50,000...................            371,885  100.00.                  
$371,885..................        383,837,000  0.0002689  x  total      
                                                assets.                 
$383,837,000..............      1,161,485,000  103,213.77 + 0.000784  x 
                                                total assets over       
                                                $383,837,000.           
$1,161,485,000 and over...  .................  164,181.37 + 0.0002617 x 
                                                total assets over       
                                                $1,161,485,000.         
------------------------------------------------------------------------

    NCUA is concerned that the present operating fee scale does not 
give enough consideration to the ability of small credit unions to pay. 
As assets continue to grow, the burden on smaller credit unions becomes 
greater than the burden on larger credit unions. The following table, 
based upon December 31, 1994, NCUA 5300 report financial data, 
indicates that as both a percentage of total expenses and a percentage 
of average assets the operating fee is more burdensome on small credit 
unions than on larger credit unions:

------------------------------------------------------------------------
                                                  Percent               
                                                   op fee    Percent op 
                                                  expense    fee expense
              Asset size category                 to total   to average 
                                                 operating     assets   
                                                  expense               
------------------------------------------------------------------------
Less than $500,000-............................   1.51              .07 
$500,000-$2,000,000............................    .93              .04 
$2,000,000-$10,000,000.........................    .90              .03 
$10,000,000-$50,000,000........................    .82              .03 
$50,000,000-$100,000,000.......................    .78              .03 
Greater than $100,000,000......................    .73              .02 
------------------------------------------------------------------------

    To reduce or eliminate this burden on small credit unions it is 
proposed that the asset size of credit unions eligible for an exemption 
from the operating fee be increased from $50,000 to $500,000. A total 
of 587 federal credit unions between $50,000 and $371,885 presently pay 
$100 and would benefit from this proposal. An additional 193 credit 
unions, with assets between $371,885 and $500,000, that pay an average 
fee of $117 would benefit from this proposal as well.
    It is further proposed that the asset size of federal credit unions 
that pay a $100 fee be expanded to credit unions with assets over 
$500,000 but less than or equal to $750,000. A total of 349 federal 
credit unions in this category presently pay an average operating fee 
of $167. The restructuring of the operating fee scale will restore the 
fee to a more equitable assessment basis without imposing any 
significant, financial burden on larger credit unions. The total cost, 
in terms of reduced revenue, of this proposal is $104,747. This 
shortfall in revenue will be spread among all other federal credit 
unions (at an average cost of $16.63 per federal credit union), and 
will provide larger credit unions with an additional opportunity to 
help and support smaller credit unions which will strengthen the entire 
credit union movement. Finally, the proposed fee scale will comply more 
fully with the intent of the Federal Credit Union Act by assessing a 
fee based upon the credit union's ability to pay.

List of Subjects in 12 CFR Part 701

    Credit, Credit union, Insurance, Mortgages.

    Authority: 12 U. S. C. 1755, 31 U.S.C. 3717.

    By the National Credit Union Administration Board on June 14, 
1995.
Becky Baker,
Secretary of the Board.
[FR Doc. 95-15494 Filed 6-23-95; 8:45 am]
BILLING CODE 7535-01-U