Request for Comment Regarding Overhead Transfer Rate Methodology, 4803-4835 [2016-01626]

Agencies

• National Credit Union Administration

[Federal Register Volume 81, Number 17 (Wednesday, January 27, 2016)]
[Notices]
[Pages 4803-4835]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01626]



[[Page 4803]]

Vol. 81

Wednesday,

No. 17

January 27, 2016

Part III





National Credit Union Administration





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Request for Comment Regarding Overhead Transfer Rate Methodology; 
Notices

Federal Register / Vol. 81 , No. 17 / Wednesday, January 27, 2016 / 
Notices

[[Page 4804]]


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NATIONAL CREDIT UNION ADMINISTRATION


Request for Comment Regarding Overhead Transfer Rate Methodology

AGENCY: National Credit Union Administration (NCUA).

ACTION: Request for comment.

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SUMMARY: The NCUA Operating Budget has two primary funding mechanisms: 
(1) An Overhead Transfer, which is funded by federal credit unions 
(FCUs) and federally insured state-chartered credit unions (FISCUs); 
and (2) annual Operating Fees, which are charged only to FCUs. In a 
voluntary effort to invite input from stakeholders representing federal 
and state-chartered credit unions, the NCUA Board (Board) is 
simultaneously requesting comments on the methodologies for both 
funding mechanisms in separate notices in the Federal Register.
    This request for comments focuses on the methodology NCUA uses to 
determine the Overhead Transfer Rate (OTR). To facilitate comments, the 
Board is also assembling and describing its existing OTR methodologies 
and processes, which are also available on NCUA's Web site. The Board 
applies the OTR to NCUA's Operating Budget to determine the portion of 
the budget that will be funded from the National Credit Union Share 
Insurance Fund (NCUSIF). The Board invites comments on all aspects of 
the OTR methodology and any alternatives commenters may offer. Areas 
the Board specifically seeks comments on include:
     Whether the OTR should continue to be determined using a 
formula-driven approach, or instead be set largely at the discretion of 
the Board;
     The definition NCUA uses for insurance-related activities;
     Adjustments or changes to the current calculation; and
     Alternate methodologies to arrive at an accurate and fair 
allocation of costs.
    To be most instructive to the Board, commenters are encouraged to 
provide the specific basis for their comments and recommendations, as 
well as documentation to support their proposed adjustments or 
alternatives.

DATES: Comments must be received on or before April 26, 2016 to be 
assured of consideration.

ADDRESSES: You may submit comments by any of the following methods 
(Please send comments by one method only):
     NCUA Web Site: https://www.ncua.gov/about/pages/board-comments.aspx. Follow the instructions for submitting comments.
     Email: Address to boardcomments@ncua.gov. Include ``[Your 
name]--Comments on OTR Methodology'' in the email subject line.
     Fax: (703) 518-6319. Include your name and the following 
subject line: ``Comments on OTR Methodology.''
     Mail: Address to Gerard Poliquin, Secretary of the Board, 
National Credit Union Administration, 1775 Duke Street, Alexandria, 
Virginia 22314-3428.
     Hand Delivery/Courier: Same as mail address.
    Public Inspection: You can view all public comments on NCUA's Web 
site at https://www.ncua.gov/about/pages/board-comments.aspx as 
submitted, except for those we cannot post for technical reasons. NCUA 
will not edit or remove any identifying or contact information from the 
public comments submitted. You may inspect paper copies of comments at 
NCUA's headquarters at 1775 Duke Street, Alexandria, Virginia 22314, by 
appointment weekdays between 9 a.m. and 3 p.m. To make an appointment, 
call (703) 518-6360 or send an e-mail to EIMail@ncua.gov.

FOR FURTHER INFORMATION CONTACT: Russell Moore, Loss/Risk Analysis 
Officer, Office of Examination and Insurance, National Credit Union 
Administration, 1775 Duke Street, Alexandria, Virginia 22314-3428 or 
telephone: (703) 518-6383.

    Authority:  12 U.S.C. 1783(a); 1766(j)(3).

SUPPLEMENTARY INFORMATION: NCUA charters, regulates and insures 
deposits in federal credit unions (FCUs) and insures deposits in state-
chartered credit unions that have their shares insured through the 
NCUSIF. To cover expenses related to its statutory mission, the Board 
adopts an Operating Budget in the fall of each year. The Federal Credit 
Union Act (FCU Act) authorizes two primary sources to fund the 
Operating Budget: (1) Requisitions from the NCUSIF ``for such 
administrative and other expenses incurred in carrying out the purposes 
of [Title II of the FCU Act] as [the Board] may determine to be 
proper''; \1\ and (2) ``fees and assessments (including income earned 
on insurance deposits) levied on insured credit unions under [the FCU 
Act].'' \2\ Among the fees levied under the FCU Act are annual 
Operating Fees, which are required for FCUs under 12 U.S.C. 1755 ``and 
may be expended by the Board to defray the expenses incurred in 
carrying out the provisions of [the FCU Act,] including the examination 
and supervision of [FCUs].'' Taken together, these dual funding 
authorities effectively require the Board to determine which expenses 
are appropriately paid from each source, though these two provisions 
give the Board broad discretion in this.
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    \1\ 12 U.S.C. 1783(a).
    \2\ 12 U.S.C. 1766(j)(3). Other sources of income for the 
Operating Budget include interest income, funds from publication 
sales, parking fee income, and rental income.
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    To determine an appropriate division of expenses between these two 
funding sources, the Board uses the OTR methodology described in this 
publication. This version of the OTR methodology was first adopted by 
the Board in 2003 and refined in 2013. The OTR represents the 
allocation formula the Board uses to determine which expenses are 
properly characterized as insurance related and charged to the NCUSIF 
under Title II, rather than collected through annual Operating Fees.\3\ 
Only two statutory provisions limit the Board's discretion with respect 
to NCUSIF requisitions for NCUA's Operating Budget and, hence, the OTR. 
First, expenses funded from the NCUSIF must carry out the purposes of 
Title II of the FCU Act, which relate to share insurance.\4\ Second, 
NCUA must fund at least some part of its Operating Budget through fees 
charged pursuant to 12 U.S.C. 1766(j)(3).\5\ NCUA has not imposed any 
additional policy or regulatory limitations on its discretion for 
determining the OTR.
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    \3\ Annual Operating Fees must ``be determined according to a 
schedule, or schedules, or other method determined by the NCUA Board 
to be appropriate, which gives due consideration to the expenses of 
the [NCUA] in carrying out its responsibilities under the [FCU Act] 
and to the ability of [FCUs] to pay the fee.'' 1755(b). The NCUA 
Board's methodology for determining the aggregate amount of 
Operating Fees is discussed in a separate Federal Register 
publication.
    \4\ 12 U.S.C. 1783(a).
    \5\ Accord 12 U.S.C. 1755(a) (``In accordance with rules 
prescribed by the Board, each [FCU] shall pay to the [NCUA] an 
annual operating fee which may be composed of one or more charges 
identified as to the function or functions for which assessed.'').
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    Third, while not a legal requirement, the current Board policy is 
to use a cost-accounting methodology that by design is both neutral and 
equitable with respect to credit union charter types.
    The methodology satisfies the two legal requirements identified 
above. First, the funds transferred from the NCUSIF must relate to 
NCUA's insurance functions. The Board notes the breadth of that 
category, and each expense funded from the OTR in accordance with the 
formula explained herein, reasonably relates to insurance for purposes 
of 12 U.S.C. 1783(a). NCUA's definition of ``insurance related 
examination procedures'' that fall under Title II includes 
``examination or supervision contact procedures [that]

[[Page 4805]]

address safety and soundness issues.'' Safety and soundness terminology 
is sprinkled throughout Title II of the FCU Act with respect to NCUA's 
insurance-related responsibilities.\6\ As such, this definition is 
contained within the broad swath of 12 U.S.C. 1783(a), which simply 
requires that an expense be ``incurred in carrying out the purposes of 
[Title II]'' on share insurance to be eligible for OTR coverage. 
Similarly, ``insurance regulatory related examination procedures'' are 
defined in the OTR methodology as those that assess compliance with 
regulations that ``address safety and soundness issues.'' This 
secondary definition expressly excludes procedures that assess 
compliance with regulations ``designed to protect consumers directly.'' 
Therefore, this supplemental definition narrows, rather than expands, 
the procedures that the OTR methodology includes under Title II, since 
some consumer protection regulations may also be directed at safety and 
soundness. Further, neither the activities the OTR methodology 
identifies as examples of examination or supervision procedures that 
address safety and soundness, nor any of the NCUA-specific regulations 
classified as ``insurance regulatory'' related in the regulation 
mapping in Appendix A, fall outside of this definition.
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    \6\ See, e.g., 12 U.S.C. 1781(c)(2) (referencing ``unsafe and 
unsound'' financial condition and policies in connection with 
applications for insurance); 1782(a)(6)(b) (referencing the phrase 
``unsafe and unsound'' in connection with a failure to obtain an 
outside, independent audit); 1786 (addressing ``unsafe or unsound 
practices'' or ``safety and soundness'' in connection with 
termination of insurance, orders to cease and desist, prohibition 
and removal orders, civil money penalties, and delay in publication 
of final orders); 1787(b)(2)(D) (authorizing the Board to take 
actions as conservator to put an insured credit union ``in a sound 
and solvent condition''); 1790d(h)(1) (referencing ``safety and 
soundness'' in relation to prompt corrective action and 
reclassification of a credit union's net worth category).
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    Second, at least some part of the Operating Budget comes from fees 
charged to insured credit unions under 12 U.S.C. 1755. The imposition 
of the annual Operating Fees on FCUs and their use to pay expenses in 
the Operating Budget is sufficient evidence of the proper exercise of 
the Board's discretion under these two limitations. Within these broad 
statutory bounds, the Board is seeking additional public input on its 
OTR methodology through Federal Register processes.
    Since its inception, NCUA has taken the position that the OTR is 
not a legislative rule under the Administrative Procedure Act (APA) and 
is, therefore, exempt from notice and comment rulemaking processes.\7\ 
As such, NCUA has never used notice and comment rulemaking to establish 
either an individual determination of the OTR or the general 
methodology used to calculate the OTR. However, the OTR has been 
explained, discussed, and reviewed in various public records, including 
in annual Board Action Memorandums related to budget matters, 
independent evaluations, and other documents available in public 
records and on NCUA's Web site.\8\ Beyond its APA obligations, the 
Board has chosen to solicit public comments on the OTR processes and 
methodologies through this Federal Register publication.
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    \7\ NCUA's legal analysis with respect to the OTR and APA 
process is available at the following Web page: https://www.ncua.gov/Legal/Documents/Opinion/OL2015-0818.pdf. Note that even 
where not subject to notice and comment procedures, the APA provides 
that ``[a]gency action made reviewable by statute and final agency 
action for which there is no other adequate remedy in a court are 
subject to judicial review.'' 5 U.S.C. 704. The scope of such a 
review is set forth in 5 U.S.C. 706.
    \8\ Materials related to the OTR can be found at the following 
NCUA Web page: https://www.ncua.gov/About/Pages/budget-strategic-planning/supplementary-materials.aspx.
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Table of Contents

I. Overview
II. Context For OTR
III. History
IV. Detailed Discussion of OTR Methodology
    a. Examination Time Survey
    b. Workload Budget
    c. Financial Budget
    d. Calculation of Insurance and Non-Insurance Costs
    e. Allocation of Insurance and Non-Insurance Costs
    f. Calculating the OTR
    g. State Supervisory Authority (SSA) Imputed Value
V. Request for Comment
VI. Appendix A--Mapping of Regulations
VII. Appendix B--Examination Time Survey Instructions

I. Overview

    NCUA is the independent federal agency created by the U.S. Congress 
to regulate, charter and supervise FCUs. With the backing of the full 
faith and credit of the United States, NCUA also operates and manages 
the NCUSIF. Congress enacted Title II of the FCU Act on October 19, 
1970.\9\ Title II established the NCUSIF, requiring all federal credit 
unions to immediately apply for insurance and permitting the Board to 
insure accounts in state-chartered credit unions. After enactment of 
Title II, the Board established an allocation formula, the Overhead 
Transfer Rate, to determine the amount of the Operating Budget that it 
would requisition from the NCUSIF for insurance-related expenses. Over 
time, the Board has refined the OTR process to ensure the equitable 
allocation of costs between NCUA's dual roles of insurer (insurance 
related activities) and regulator that charters federal credit unions 
(non-insurance related activities).
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    \9\ Section 1783(a) of the FCU Act created the NCUSIF and 
authorized the NCUA Board to use the fund to pay for ``such 
administrative and other expenses incurred in carrying out the 
purposes of [Title II] as it may determine to be proper''.
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    NCUA's current methodology, in place since 2003 and refined in 
2013, determines the OTR using the results of an examiner time survey 
(ETS). The ETS captures the time NCUA spends examining and supervising 
FCUs, carrying out its dual mission as insurer of federally insured 
credit unions (FICUs), and the chartering authority for federal credit 
unions. The OTR methodology also factors in the following:
     The value to the NCUSIF of the insurance-related work 
performed by state supervisory authorities (SSAs).
     The cost of NCUA resources and programs with different 
allocation factors from the examination and supervision program.
     The distribution of insured shares between FCUs and 
federally insured state-chartered credit unions (FISCUs).
     Operational costs charged directly to the NCUSIF.
    The goal of the methodology is to create a comprehensive and 
equitable calculation and allocation of costs to set the OTR annually 
within a framework that can be administered at minimal cost.

II. Context for the OTR

    There is a distinct overlap between the historical role of a 
regulator, concerned with enforcing laws and implementing public 
policy, and that of an insurer. Though not motivated by the associated 
financial liability that comes with the role of insurer, regulators 
address threats to the viability of their financial institutions to 
protect consumers and their jurisdiction's economy. This focus on 
viability benefits the insurer. The primary roles of an insurer are to 
protect depositors and the taxpayer, and contribute to the stability of 
the financial system.
    Before the advent of federal deposit insurance, federal financial 
institution regulators were concerned with protecting the stability of 
the financial system by ``regulating'' it. Thus, financial institution 
examinations focused on ensuring (1) statutes and regulations were 
followed to protect consumers, and (2) institutions were viable to 
protect consumer deposits,

[[Page 4806]]

preserve access to financial services, and safeguard the stability of 
the economy.\10\
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    \10\ The Office of the Comptroller of the Currency (OCC) 
charters, regulates, and supervises all national banks and federal 
savings associations as well as federal branches and agencies of 
foreign banks. On its Web site, the OCC lists its mission as 
ensuring that national banks and federal savings associations 
operate in a safe and sound manner, provide fair access to financial 
services, treat customers fairly, and comply with applicable laws 
and regulations. Similarly, the Board of Governors of the Federal 
Reserve System has supervisory and regulatory authority over a wide 
range of financial institutions, including state-chartered banks 
that are members of the Federal Reserve System, bank holding 
companies, thrift holding companies and foreign banking 
organizations that have a branch, agency, a commercial lending 
company subsidiary or a bank subsidiary in the United States. On its 
Web site, The Federal Reserve states its mission is to provide the 
nation with a safer, more flexible, and more stable monetary and 
financial system. One of its four stated general duties is 
supervising and regulating banking institutions to ensure the safety 
and soundness of the nation's banking and financial system and to 
protect the credit rights of consumers. On its Web site, the Federal 
Deposit Insurance Corporation states its mission is to maintain 
stability and public confidence in the nation's financial system by 
insuring deposits, examining and supervising financial institutions 
for safety and soundness and consumer protection, making large and 
complex financial institutions resolvable, and managing 
receiverships.
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    NCUA has a unique dual role in that it serves as both the regulator 
of FCUs and the insurer of FCUs and FISCUs. Given this dual role, it is 
appropriate to allocate examination and supervision costs between the 
NCUSIF and Operating Fees charged to FCUs. The policy rationale for 
this allocation is supported by various provisions of the FCU Act.
    In Title II of the FCU Act, Congress established the NCUSIF and 
housed it within NCUA for administration by the NCUA Board.\11\ 
Congress envisioned efficiencies from this arrangement, as well as 
NCUA's partnership with state regulators. Evidence of this intent to 
streamline can be found in 12 U.S.C. 1782(a)(5), which requires reports 
FCUs must file under Title I of the FCU Act to be prepared so ``that 
they can be used for share insurance purposes.'' Similarly, this 
provision requires NCUA to use the reports filed by FISCUs with their 
state regulators ``for share insurance purposes . . . [t]o the maximum 
extent feasible. . . .'' \12\
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    \11\ 12 U.S.C. 1783.
    \12\ 12 U.S.C. 1782(a)(5).
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    Congress also recognized that, in addition to losses related to 
credit union failures, the NCUSIF would incur expenses related to its 
administration, including examination staff and other employees. Title 
II empowers the NCUA Board to determine the proper allocation of 
``administrative and other expenses incurred'' under Title II that may 
be funded by direct requisitions from the NCUSIF.\13\ Title II further 
subjects the resources expended for ``insurance purposes'' to the 
Board's discretion by empowering the Board to ``appoint examiners who 
shall have power, on its behalf, to examine any insured credit union, 
any credit union making application for insurance of its member 
accounts, or any closed insured credit union whenever in the judgment 
of the Board an examination is necessary to determine the condition of 
any such credit union. . . .'' \14\ Title I confirms this design by 
requiring that salaries and expenses of the Board and NCUA employees 
``be paid from fees and assessments (including income earned on 
insurance deposits) levied on insured credit unions under [the FCU 
Act].'' \15\ In addition to assessments charged to all insured credit 
unions simply by nature of their NCUSIF insurance, Title I requires an 
annual Operating Fee charged to FCUs in recognition of the additional 
duties required of NCUA under Title I with respect to FCUs.\16\
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    \13\ 12 U.S.C. 1783(a).
    \14\ 12 U.S.C. 1784(a) (emphasis added).); see also 1789(a)(7).
    \15\ Sec.  1766(j)(3) (emphasis added).
    \16\ Sec.  1755.
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    NCUA also has the authority to promulgate rules and regulations to 
carry out the provisions of Title II.\17\ Accordingly, the NCUA Board 
has approved rules and regulations that specifically address safety and 
soundness and protect the NCUSIF.\18\
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    \17\ Sec.  1789(a)
    \18\ NCUA staff have mapped all examination related rules and 
regulations to one of two categories: insurance regulatory related, 
or non-insurance and consumer regulatory related. This regulatory 
mapping provides the key basis for determining how examination time 
is measured for purposes of the budgetary Overhead Transfer Rate.
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    Under the discretion vested in it under the FCU Act, the NCUA 
Board's primary motivation for the agency's regulations and examination 
program has been managing risk to the NCUSIF posed by all insured 
credit unions, whether state chartered or federal. The Board notes that 
NCUA's role as insurer is best fulfilled by a proactive approach to 
preventing losses, in addition to paying the post-failure obligations 
that NCUSIF insurance coverage requires. Since the implementation of 
federal share insurance in 1970, the NCUA Board has instituted a much 
more proactive examination and supervision program geared toward safety 
and soundness, which focuses on insurance related issues. In 2002, the 
NCUA Board strengthened its commitment to fulfilling NCUA's role as 
insurer by implementing the Risk-Focused Examination Program. This 
program bases examination scope and timing to a large extent on the 
risks an institution poses to the NCUSIF. The OTR's portion of NCUA's 
Operating Budget, including its changes over time, reflects the Board's 
fulfillment of its insurance responsibilities under the FCU Act under 
evolving economic and legislative circumstances.

III. History

    The NCUSIF was established in 1970 through an amendment to the FCU 
Act. Section 203(a) of the FCU Act, 12 U.S.C. 1783(a), created the 
NCUSIF and authorized the Board to use it to pay for ``such 
administrative and other expenses incurred in carrying out the purposes 
of [the FCU Act] as it may determine to be proper.''
    In 1972, a Government Accountability Office (GAO) audit \19\ 
recommended NCUA adopt a method of allocating costs between NCUA and 
the newly formed NCUSIF. Between 1973 and 1980, various cost allocation 
methods were employed, including direct charges to the NCUSIF for 
insurance expenses, including costs to close institutions, liquidation 
and merger costs, and, examiner time spent supervising--as opposed to 
examining--institutions. Starting in 1981, the OTR ranged between 30 
and 34 percent, and stayed in that range through 1984.
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    \19\ https://www.gao.gov/assets/210/203181.pdf.
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    From 1985 through 1994, NCUA's Office of Examination and Insurance 
(E&I) coordinated an annual ETS to determine an appropriate factor for 
apportioning the agency's total operating expenses. Examiners completed 
1,000 to 1,200 survey forms each year. The survey results supported a 
transfer rate between 50.1 percent and 60.4 percent for insurance 
related activities; however, the NCUA Board maintained the OTR at 50 
percent.
    In 1994, and again in 1997, the NCUA Board approved conducting 
examiner time surveys once every three years. Three-year surveys 
covered fiscal years 1995 through 1997 and fiscal years 1998 through 
2000. During that period, the OTR remained at 50 percent through 2000.
    The NCUA Board then voted to resume annual examiner time surveys in 
2000 and expanded the survey to include more examiners, as well as 
central and regional office staff. The fiscal year 2000 survey results 
supported a transfer rate of 66.72 percent. After 15 years of holding 
the transfer rate at 50 percent, the NCUA

[[Page 4807]]

Board increased the transfer rate to 66.72 percent for fiscal year 
2001.
    The Board also decided to hire an independent party to assess the 
OTR process. Deloitte & Touche's review of the OTR process was issued 
on September 5, 2001 and included several recommendations to improve 
the OTR process.\20\ These recommendations were implemented in 2002.
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    \20\ The full independent report from Deloitte is available on 
NCUA's Web site: https://www.ncua.gov/About/Documents/Budget/Misc%20Documents/2001DeloitteReportonOTRProcess.pdf.
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    In 2002, as a result of the Deloitte & Touche review, NCUA 
automated the examiner time survey \21\ and enhanced examiner training 
and guidance. The agency also initiated a task force to conduct a 
comprehensive review of the OTR, in part to better define insurance-
related activities. In October 2003, GAO issued report GAO-04-91 \22\ 
recommending continuous improvement of the process for and 
documentation of the OTR, updating the rate annually, and completing 
the examiner time surveys with full representation. Noting the task 
force review, NCUA agreed to set the rate annually, improve the 
methodology and documentation, and ensure examiner time survey sampling 
was statistically valid.
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    \21\ The examiner time survey process is discussed in detail 
later in this document.
    \22\ https://www.gao.gov/new.items/d0491.pdf.
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    The agency task force completed its review of the OTR in 2003 and 
recommended a revised, comprehensive methodology for calculating the 
OTR annually.\23\ The NCUA Board received comments from credit union 
trade groups \24\ on the proposed revised methodology and ultimately 
approved adoption of the revised methodology and an OTR of 59.8 percent 
for fiscal year 2004 at the November 20, 2003, open Board meeting.\25\
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    \23\ The pre-decisional staff proposal is available on NCUA's 
Web site: https://www.ncua.gov/About/Documents/Budget/Misc%20Documents/Additional%20Documents/2003%20Task%20Force%20Proposal.pdf.
    \24\ A summary of the comments received is available on NCUA's 
Web site: https://www.ncua.gov/About/Documents/Budget/Misc%20Documents/Additional%20Documents/2003%20Summary%20of%20Pre-Adoption%20OTR%20Stakeholder%20Meeting%20Comments.pdf.
    \25\ https://www.ncua.gov/About/Documents/Budget/Misc%20Documents/2003OTRBAM.pdf.
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    Using the revised methodology approved in 2003, the OTR approved 
annually by the NCUA Board ranged between 52.0 percent and 57.2 percent 
for fiscal years 2005 through 2010. The NCUA Board approved funding for 
an independent review of the OTR at the November 2009 open Board 
meeting. PricewaterhouseCoopers issued its first of two reports to NCUA 
in January 2011.\26\ Based on the 2011 PricewaterhouseCoopers report, 
the definitions used in the examiner time survey were clarified over 
the next two ETS cycles.
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    \26\ https://www.ncua.gov/About/Documents/Budget/Misc%20Documents/2011PwCOTRReview.pdf.
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    The 2010-2011 ETS cycle defined insurance-related and non-insurance 
related activities as follows: \27\
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    \27\ As described in the ETS section, the ETS cycle runs from 
June 1, Year 1 to May 31, Year 2. The PricewaterhouseCoopers report 
was issued mid-cycle, January 2011.

    Insurance Related Examination Procedures--Insurance Related 
examination or supervision contact procedures address safety and 
soundness issues. On the time survey forms, respondents should 
classify the time used to evaluate safety and soundness as 
``insurance related.'' ``Insurance Related'' time is
     Evaluating financial trends and Call Report data
     Determining the credit union's solvency position
     Evaluating risks, and potential costs, the credit union 
presents to the NCUSIF (when appropriate)
     Assessing management's efforts to protect earnings and 
net worth by identifying, evaluating, controlling, and monitoring 
internal and external risks
     Assessing management's abilities to develop strong 
policies and a reliable internal control structure
    Non-Insurance Related Examination Procedures--Non-Insurance 
Related examination or supervision contact procedures address 
compliance with the laws and regulations that NCUA enforces. On the 
survey forms, respondents should classify the time used to evaluate 
issues not related to safety and soundness
     Compliance with consumer protection laws, NCUA Rules 
and Regulations, the FCU Act, and Bylaws
     Review of previously cited regulatory violations, areas 
of concern, and corrective actions taken
     Call report accuracy and timeliness

    After the issuance of the PricewaterhouseCoopers report in January 
2011, NCUA improved the ETS Instruction definitions for insurance and 
non-insurance related activities for the 2011-2012 ETS cycle. 
Specifically, new categories were established to help examiners 
distinguish between regulations established to protect the NCUSIF, 
labeled ``insurance regulatory'', from regulations established to 
provide consumer protection or otherwise govern how federal credit 
unions operate, labeled ``consumer regulatory.'' This resulted in a 
more accurate assessment of insurance related activities (including 
insurance-regulatory) and consumer regulatory or non-insurance related 
activities. NCUA solicited comments from representatives of key 
stakeholders on the proposed changes to the definitions of the agency's 
activities as they related to the OTR methodology.\28\ The 2011-2012 
ETS Instructions contained the following definitions:
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    \28\ This included the Credit Union National Association, the 
National Association of Federal Credit Unions, the National 
Association of State Credit Union Supervisors, and the National 
Federation of Community Development Credit Unions.

    Insurance Related Examination Procedures--No change from 2010-
2011 ETS Instruction definition stated above.
    Insurance Regulatory Related Examination Procedures--Insurance 
Regulatory related examination or supervision contact procedures 
address regulations that are not designed to protect consumers 
directly. This includes assessing compliance with all regulations 
outside of consumer oriented regulations--see listing of consumer 
regulations in the following section--Consumer Regulatory 
examination procedures. Insurance Regulatory related regulations 
include those regulations that address safety and soundness issues. 
Examples include (this is not all inclusive):
     701.21--Loans to Members and Lines of Credit to Members
    [cir] Includes total loan limit to one individual, limitation on 
maturity, rate of interest, and security.
     702--Prompt Corrective Action
    [cir] Establishes net worth categories and mandatory and 
discretionary supervisory actions
     703--Investments and Deposit Activities
    [cir] Establishes permissible investments and requires credit 
analysis prior to purchase and requires ongoing monitoring of 
securities
     712--Credit Union Service Organizations
    [cir] Establishes investment and loan limits as well as outlines 
permissible activities
     713--Fidelity Bond and Insurance Coverage
    [cir] Requires minimum bond coverage
     715--Supervisory Committee Audits and Verifications
     722--Appraisals
    [cir] Establishes minimum appraisal standards based on loan size
     723--Member Business Loans
    [cir] Establishes prohibited activities, requires specific 
policies and sets overall loan limits as well as limits to one 
member or group of associated members
    Consumer Regulatory Related Examination Procedures--Consumer 
Regulatory Related examination or supervision contact procedures 
address compliance with consumer regulations. The regulations 
include:
     Reg. B--Equal Credit Opportunity Act
     BSA--Bank Secrecy Act
     Reg. C--Home Mortgage Disclosure Act
     Reg. CC--Expedited Funds Availability
     COPPA--Children's Online Privacy Protection Act
     Reg. D--Reserve Requirements
     Reg. E--Electronic Funds Transfer Act

[[Page 4808]]

     FACTA--Fair and Accurate Credit Transactions Act
     FCPR--Fair Credit Practice Rule
     FCRA--Fair Credit Reporting Act
     FDCPA--Fair Debt Collections Practices Act
     FDPA--Flood Disaster Protection Act
     FHA--Fair Housing Act
     GLBA--Gramm-Leach Bliley Act
     HOEPA--Home Ownership and Equity Protection Act
     HOPA--Home Owner's Protection Act
     Reg. M--Consumer Leasing
     OFAC--Office of Foreign Asset Control
     PCFI--Privacy of Consumer Financial Information
     RFPA--Right to Financial Privacy Act
     SCRA--Service Members Civil Relief Act
     Reg.--X Real Estate Settlement Procedures Act
     Credit Card Act
     Unlawful Internet Gaming Enforcement Act
     SAFE Act--Secure and Fair Enforcement for Mortgage 
Licensing Act
     Reg.--Z Truth in Lending
     Rules and Regulations Part 706--Credit Practices
     Rules and Regulations Part 707--Truth in Savings
     Rules and Regulations Part 717--Fair Credit Reporting

    In 2012, the Office of Examination and Insurance (E&I) further 
clarified the application of the insurance-related and non-insurance 
related definitions in the ETS. Specifically, all relevant NCUA 
regulations were explicitly mapped to the survey classifications to 
provide more uniformity and consistency of reporting. This breakdown 
and mapping of regulations was consistent with the existing overall 
definitions of insurance-related and non-insurance related activities. 
The primary definitions did not change; the regulations were merely 
explicitly mapped based on the overarching definitions. This 
clarification resulted in more consistency by respondents on the ETS. 
Appendix A contains the mapping provided to ETS participants. In 2013, 
NCUA also obtained an independent review of the mapping of the 
regulations from PricewaterhouseCoopers.\29\ The mapping of NCUA's 
regulations outlined in the PricewaterhouseCoopers October 2, 2013 
report, is available on NCUA's Web site.
---------------------------------------------------------------------------

    \29\ https://www.ncua.gov/About/Documents/Budget/2013/2013ETSAnalysis.pdf.
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    Based on the validated mapping of NCUA regulations to guide 
examiners in completing the annual time survey, the average survey 
results for insurance related activities increased from 67 percent to 
88 percent of examiner time. This resulted in an OTR for 2014 of 69.2 
percent, which was approved at the November 2013 open NCUA Board 
meeting. The OTR rose to 71.8 percent for 2015 and to 73.1 percent for 
2016. Figure 1 shows the trends in the OTR since 2004.\30\
---------------------------------------------------------------------------

    \30\ The dollar amount of the OTR in this graph is based on the 
NCUA Board approved budget, not actual expenditures. The OTR is 
applied to actual expenses incurred each month.
[GRAPHIC] [TIFF OMITTED] TN27JA16.000

    Since the creation of the NCUSIF in 1970, NCUA's allocation of 
funds between its dual roles has evolved to address changes in the 
credit union system and changes to NCUA operations. As credit unions 
have become larger and more complex, the potential risk to the NCUSIF 
has increased. As a result, NCUA's operations have adapted. This has 
resulted in an increased focus on insurance-related activities, and 
this focus remains in place today.
    The FCU Act and NCUA Rules and Regulations have also evolved in 
recent history, and as a result, the agency has placed more of a focus 
on safeguarding the NCUSIF. In particular:
    1. The Credit Union Membership Access Act (CUMAA) was enacted into 
law in 1998.\31\ This law resulted in new obligations on credit unions 
and NCUA designed to protect the NCUSIF, such as:
---------------------------------------------------------------------------

    \31\ https://www.ncua.gov/Resources/Documents/LCU1998-16.pdf.
---------------------------------------------------------------------------

    a. Imposing new requirements on federally insured credit unions 
with respect to financial statements and audits, and member business 
loans.\32\
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    \32\ CUMAA imposed a new aggregate limit on a credit union's 
outstanding member business loans of the lesser of 1.75 times the 
credit union's net worth or 12.25% of the credit union's total 
assets.

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[[Page 4809]]

    b. Establishing a new system of tiered capital requirements for all 
federally insured credit unions.\33\
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    \33\ A net worth standard of 7 percent of assets was established 
for insured credit unions, as well as risk-based capital standards 
for ``complex'' credit unions as defined by NCUA. For credit unions 
not meeting these standards, progressively more stringent ``prompt 
corrective action'' requirements apply.
---------------------------------------------------------------------------

    2. During the aftermath of the financial crisis, from 2010 to 2015, 
the NCUA Board strengthened critical safety and soundness rules, such 
as:
    a. Codifying interest rate risk guidance into a rule ensuring that 
federally insured credit unions holding the vast majority of the credit 
union system's assets have appropriate policies to manage interest rate 
risk in adverse scenarios.
    b. Designing a targeted emergency liquidity rule ensuring that 
federally insured credit unions at various asset levels have scalable 
contingency plans to tap reliable sources of liquidity during a crisis.
    c. Establishing concentration limits and required due diligence on 
loan participations.
    3. From 2011 through 2015, NCUA also modernized various regulations 
to provide credit unions with more flexibility and authority.\34\ While 
these modernized rules reduced compliance burdens, they resulted in 
examiners devoting more time to ensuring safety and soundness through 
the examination process rather than relying on regulatory limits. For 
example, NCUA:
---------------------------------------------------------------------------

    \34\ https://www.ncua.gov/newsroom/Pages/RegulatoryModernizationInitiativeResults.pdf.
---------------------------------------------------------------------------

    a. Expanded regulatory relief eligibility for small and non-complex 
credit unions.
    b. Eliminated the fixed assets cap for FCUs.
    c. Eased troubled debt restructuring rules.
    d. Authorized ``plain-vanilla'' derivatives for FCUs.
    Since 2001, various independent third-party assessments have also 
resulted in recommendations to improve and refine the OTR methodology, 
most of which NCUA has adopted.\35\ NCUA is now seeking public comment 
on the current OTR methodology, as described throughout the remainder 
of this document, for possible additional improvement.
---------------------------------------------------------------------------

    \35\ For a discussion of recommendations not adopted and the 
associated rationale, see the Overhead Transfer Rate (OTR)--Timeline 
on NCUA's website at https://www.ncua.gov/About/Documents/Budget/Misc%20Documents/overhead-transfer-rate-chronology.pdf.
---------------------------------------------------------------------------

IV. Detailed Discussion of OTR Methodology

a. Examination Time Survey

    NCUA's mission is to foster the safety and soundness of federally 
insured credit unions, which is primarily achieved through its 
examination program. Consequently, the majority of NCUA's resources are 
dedicated to the examination and supervision of federally insured 
credit unions. Examiners expend time on both regulatory and insurance 
activities during examinations and supervision contacts at FCUs. 
Therefore, one of the key components needed to calculate the cost for 
NCUA's regulatory role and insurance roles is the annual ETS. The ETS 
applies only to FCU examination and supervision contacts, as 
examinations (insurance reviews) of FISCUs have by definition the sole 
purpose of managing risk to the NCUSIF. The Board invites comment on 
the existing ETS process.
    Since its inception in 1985, the ETS evolved from a manually 
completed form to the automated system used now. From 1985 to 1994, 
NCUA collected 1,000 to 1,200 manually completed survey forms annually. 
Survey forms were completed by participants for each FCU examination 
(work classification code [WCC] 10) and each FCU supervision contact 
(WCC 22). Since survey results were consistent, NCUA reduced the sample 
size considerably and instead of annual collection, moved to a 3-year 
cycle. In 1994, 1997, and 2000, the sample size ranged from 60 to 100 
survey forms. There were no surveys completed in 2001.
    In 2001 Deloitte & Touche completed a study of the ETS process and 
concluded it was reasonable and appropriate for use in allocating 
NCUA's costs between insurance-related and regulatory-related 
activities.\36\ The study included some recommendations to enhance the 
survey process, such as automating the survey form, improving 
communications, and varying the period of collection, but did not 
recommend any changes to the survey's content. NCUA implemented those 
recommendations.
---------------------------------------------------------------------------

    \36\ The Deloitte & Touche Study is available on NCUA's public 
website. https://www.ncua.gov/About/Documents/Budget/Misc%20Documents/2001DeloitteReportonOTRProcess.pdf.
---------------------------------------------------------------------------

    In 2002, E&I randomly selected one Supervisory Examiner (SE) group 
(via lottery draw) from each region to participate in the survey 
process. The regions selected three experienced Principal Examiners 
(PEs) from these SE groups to complete surveys for all FCU examination 
and supervision contacts initiated and completed during the ETS period. 
Since 2002, the participating SE groups in each region have rotated 
annually. The annual rotation ensures representative coverage of the 
population of FCUs across each region while minimizing the burden on 
field staff.
    From 1985 through 2000, examiners completed time surveys during a 
set period, often occurring near the end of the exam program year. 
Starting in 2002, examiners completed surveys for all examination and 
supervision contacts they conducted during a 12-month period that 
starts on June 1, and ends on May 31, of the following year. Utilizing 
groups from all of NCUA's regions and collecting the data throughout a 
12-month period provides a variety of FCUs, completion dates, and 
geographic locations resulting in a sample that better represents the 
entire population.
    Prior to introducing the automated form, NCUA did not provide 
formal training to survey participants. Beginning in 2002, E&I held a 
training session and a subsequent teleconference for the selected 
participants, their supervisors, and a regional office analyst from 
each region. E&I also dedicated an email address for examiners to use 
to request help with the survey. In addition, E&I created a shared 
electronic database to store information such as answers to Frequently 
Asked Questions (FAQs), summary reports, and training information.
    Since 2002, communications regarding the survey process have 
improved, which helps to ensure consistent application and reliable 
results. E&I provides training prior to the start of every ETS cycle; 
including:
     A discussion of the objectives of the ETS and its 
importance in determining the OTR,
     how to access and complete the ETS form,
     how to classify examination and supervision activities,
     how to correct data if necessary,
     a review of tools for reporting hours,
     expectations of the ETS participants, and
     resources available to the participants.
    The instructions provided to the ETS participants are included in 
Appendix B.
    As previously discussed, the NCUA Board approved funding for an 
independent review of the OTR at the November 2009 open Board meeting. 
PricewaterhouseCoopers' January 2011 report resulted in several changes 
to the

[[Page 4810]]

ETS.\37\ The definitions used in the ETS were modified to more clearly 
define the work of NCUA's examination staff. Specifically, all relevant 
NCUA regulations were explicitly mapped to the survey classifications 
to provide more uniformity and consistency of reporting. The report 
also recommended that NCUA use sample sizes that are consistent with 
the calculated sample sizes for the two main types of activities (i.e. 
programs) under survey, and specifically, that NCUA consider increasing 
the sample sizes for the federal supervision program. To improve the 
confidence interval, E&I chose one additional SE group per region to 
increase the number of supervision surveys. As the report concluded the 
examination survey size met the desired confidence level, the 
additional SE group was instructed to upload only the supervision 
contacts the PEs completed during the ETS period. This reduced the 
overall burden of completing the surveys for additional examinations.
---------------------------------------------------------------------------

    \37\ https://www.ncua.gov/About/Documents/Budget/Misc%20Documents/2011PwCOTRReview.pdf.
---------------------------------------------------------------------------

    At the end of each ETS period, NCUA monitors the results of the 
time study to ensure the sample size is statistically valid. Using the 
ETS examination upload report, NCUA calculates the mean and standard 
deviation for percentage of consumer regulatory hours of the WCC 10 
examination uploads. For the most recent ETS period, there were 142 WCC 
10 examination uploads with a total of 2,621.6 consumer regulatory 
hours. The mean was calculated to be 13.37 percent and the standard 
deviation was 9.09 percent. A statistically valid sample size is 
calculated for 99 percent, 95 percent, and 90 percent confidence 
intervals using these statistics, the corresponding Z factor from a 
standard normal distribution table, and a 3 percent margin of error. 
Table 1 illustrates the calculations for the most recent ETS period. 
NCUA's sample size of 142 exceeds the 60.92 necessary to achieve a 99 
percent confidence interval.

                                                                  Table 1--Sample Size
--------------------------------------------------------------------------------------------------------------------------------------------------------
                           C                             P = (100%-C)/2          X               S               Z               E          N = ((Z*S)/
-----------------------------------------------------------------------------------------------------------------------------------------      e)\2\
                                                           Confidence                        Standard      From standard     Margin of   ---------------
                  Confidence interval                        factor            Mean          deviation     normal tables       error        Sample size
--------------------------------------------------------------------------------------------------------------------------------------------------------
99%...................................................             0.005           13.37            9.09           2.576            3.00           60.92
95%...................................................             0.025           13.37            9.09           1.960            3.00           35.27
90%...................................................             0.050           13.37            9.09           1.645            3.00           24.84
--------------------------------------------------------------------------------------------------------------------------------------------------------

    NCUA also performs these calculations for the sample size for WCC 
22 supervision contact uploads. Using the ETS WCC 22 upload report, 
NCUA calculates the mean and standard deviation for percentage of 
consumer regulatory hours of the WCC 22 supervision contact uploads. 
For the most recent ETS period, there were 100 WCC 22 uploads with a 
total of 350.4 consumer regulatory hours. The mean was calculated to be 
16.9 percent and the standard deviation was 30.9 percent. Based on 
these statistics, NCUA's sample size produces a confidence interval of 
approximately 69 percent. To achieve a 95 percent confidence interval 
with 3 percent margin of error, would require approximately 408 
uploads. NCUA accepts a lower confidence interval for the WCC 22 
uploads because the WCC 10 examination program is the primary focus of 
the time study and to reduce the burden on field staff. Also, the 
combined WCC 10 and WCC 22 contacts result in a sample size of 242 
uploads with total of 2,972 hours. The mean of the combined sample 
calculated to be 14.84 percent and the standard deviation was 21.07 
percent. Using these statistics, a sample size of 151 provides a 
greater than 99 percent confidence level. The sample size is sufficient 
to provide reliable results.
    In 2013, NCUA also obtained an independent review of the mapping of 
the regulations.\38\ The mapping of NCUA's regulations is outlined in 
PricewaterhouseCoopers' October 2, 2013 report, which is available on 
NCUA's website and in Appendix A of this document. E&I reviews the 
regulatory mapping prior to the beginning of each ETS cycle for any 
necessary updates.\39\ Going forward, NCUA intends to clearly state in 
the preamble to proposed rules whether a rule is promulgated under its 
Title II authority (insurance) or its Title I authority (regulatory).
---------------------------------------------------------------------------

    \38\ https://www.ncua.gov/About/Documents/Budget/2013/2013ETSAnalysis.pdf.
    \39\ The current mapping has not been updated for NCUA's most 
recent final rules. Similar to other activities not explicitly 
classified in the ETS instructions, ETS participants defer to the 
overarching definitions of insurance and non-insurance related 
activities provided in the ETS instructions (see Appendix B) to 
appropriately allocate time as insurance or non-insurance.
---------------------------------------------------------------------------

    As stated earlier, two SE groups from each region participate in 
the ETS process. One group uploads both FCU examination contacts and 
FCU on-site supervision contacts while the second SE group uploads only 
FCU on-site supervision contacts. All PEs in the selected groups 
participate in the survey. PEs are selected because they possess the 
necessary level of experience to ensure accurate results where examiner 
judgment is necessary. If an SE group has less than four PEs, a second 
group is added to ensure an adequate number of examinations and 
supervision contacts are uploaded for a statistically relevant sample. 
The participating SE groups rotate each year in alphabetical order 
(Group A one year, Group B the next year, etc.) to ensure a fair 
distribution of work and to ensure a wider number of FCUs are captured 
in the survey over time. PEs who transfer to a different SE group 
during the ETS period continue uploading surveys until the survey cycle 
ends. However, PEs from a non-participating group that transfer into a 
group participating in the ETS do not upload any time surveys.
    NCUA utilizes its Automated Integrated Regulatory Examination 
System (AIRES) examination system to capture the ETS information. There 
are twelve categories of activities on the survey form, modeled on the 
risk-based examination program. The scope categories are:

1. Planning/Scope Development
2. Call Report Review
3. Supervisory Committee Review
4. Financial Analysis
5. Loan Analysis
6. Investment Analysis
7. Liquidity Analysis
8. Asset Liability Management
9. Compliance
10. Information Systems Technology
11. Management Analysis

[[Page 4811]]

12. Contact Report/Joint Conference/Follow-Up Procedures

    For each examination or supervision contact, the examiner inputs 
the hours spent on insurance, insurance regulatory related and non-
insurance and consumer regulatory related activities in each of the 
categories. A full year's worth of survey results are used to calculate 
the percentage of hours devoted to regulatory and insurance-related 
(insurance and regulatory) activities for the Federal Examination and 
Federal Supervision Programs. As previously mentioned, the ETS period 
runs from June 1 to May 31. Only examinations started after June 1 and 
completed and uploaded by the following May 31 are included in the 
survey to maintain consistency.
Results of the ETS
    The ETS is used to determine the percentage of Workload Budget 
Hours related to regulatory and insurance-related tasks for the 
following two programs:
     Federal Examination (WCC 10); and
     Federal Supervision (WCC 22).
    NCUA uses a full year's worth of survey results when determining 
the regulatory cost driver applied to the budgeted workload hours for 
its Core Programs and Special Programs. The Workload Budget is 
discussed later in this document. The results of the ETS concluded on 
May 31, 2015 are illustrated in Table 2.

                                             Table 2--Results of ETS
----------------------------------------------------------------------------------------------------------------
                                                                                                   Non-insurance
                       Contact type (WCC)                          Total surveys     Insurance       related %
                                                                     collected       related %     (regulatory)
----------------------------------------------------------------------------------------------------------------
Examination (WCC 10)............................................             142           86.83           13.17
Supervision (WCC 22)............................................             100           87.21           12.79
                                                                 -----------------------------------------------
    Total.......................................................             242           86.87           13.13
----------------------------------------------------------------------------------------------------------------

    Table 3 shows the ETS results by the scope categories.

                 Table 3--ETS Results by Scope Category
------------------------------------------------------------------------
                                                           Non-insurance
          Time category results              Insurance       related %
                                             related %     (regulatory)
------------------------------------------------------------------------
Planning/Scope Development..............           85.95           14.05
Call Report Review......................           95.61            4.39
Supervisory Committee...................           94.61             5.9
Financial Analysis......................           96.98            3.02
Loan Analysis...........................           93.65            6.35
Investment Analysis.....................           93.05            6.95
Liquidity Analysis......................           93.84            6.16
Asset Liability Management..............           96.15            3.85
Compliance..............................           41.28           58.72
Information Systems Technology..........           81.28           18.72
Management..............................           90.73            9.27
Examination Report/JC/Follow-Up.........           89.85           10.15
                                         -------------------------------
    Total...............................           86.87           13.13
------------------------------------------------------------------------

    NCUA also reviews the ETS results by CAMEL code. For the most 
recent ETS period, NCUA calculated the number of contacts by CAMEL Code 
as a percentage of the sample size. The results are documented in Table 
4. The percentage of WCC 10 examinations by CAMEL code correlate 
strongly with the total FICU population at May 31, 2015. As expected 
the percentage of WCC 22 supervision contacts is weighted more heavily 
toward CAMEL 3 and CAMEL 4 FICUs since supervision is focused on credit 
unions with financial and operational weaknesses.

                                        Table 4--CAMEL Code Distribution
----------------------------------------------------------------------------------------------------------------
                                                                                 Percent of sample
                                                                 -----------------------------------------------
                           CAMEL code                                 WCC 10          WCC 22        Total FICU
                                                                    examination     supervision     population
                                                                        (%)             (%)             (%)
----------------------------------------------------------------------------------------------------------------
1 & 2...........................................................           71.83           22.00           73.56
3...............................................................           24.65           51.00           22.41
4...............................................................            3.52           27.00            3.90
5...............................................................            0.00            0.00            0.13
----------------------------------------------------------------------------------------------------------------


[[Page 4812]]

    As Table 2 and Table 3 show, the ETS determined NCUA examiners 
spend 86.87 percent of their time on insurance related activities and 
13.13 percent of their time on non-insurance related activities during 
examinations and supervision contacts between June 1, 2014 and May 31, 
2015. As the next section will describe, the results of the ETS are 
applied to NCUA's budgeted workload program hours to determine the 
agency's budgeted hours for insurance and non-insurance related 
activities.

b. Workload Program Hours

    This step in NCUA's OTR calculation determines the percentage of 
work the agency expects to perform in insurance and non-insurance 
related activities. Specifically, the results of the ETS,\40\ and the 
assessment of work performed for other programs administered by other 
offices \41\ are applied to the workload program hours derived from 
NCUA's annual resource budget. This results in a weighted average of 
program hours devoted to NCUA's regulatory and insurance roles.
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    \40\ Discussed in Section IV.a.
    \41\ Including programs administered by the Office of Small 
Credit Union Initiatives (OSCUI) and the Office of Consumer 
Protection (OCP) as discussed in Section IV.c.
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    NCUA's annual resource budget is a comprehensive workload analysis 
that captures the amount of time budgeted to conduct examinations and 
supervision of federally insured credit unions, and other programs 
necessary to carry out NCUA's dual mission as insurer and regulator. 
The annual resource budget estimates hours in three major categories: 
\42\
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    \42\ Time budgeted for core and special programs is considered 
productive time, while administrative hours are considered non-
productive time. These classifications are used during the SSA 
Imputed Value step of the OTR calculation.
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    1. Core Programs includes NCUA's FCU and FISCU examinations and on- 
and off-site supervision.
    2. Special Programs includes NCUA's specialized examination 
programs