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Washington
CU bank premiums similar over next decade CUNA
WASHINGTON (3/23/11)—The deposit insurance assessments charged by regulators to credit unions and banks will be “very similar” over the coming decade, revising previous estimates that predicted higher bank assessments, Credit Union National Association (CUNA) Chief Economist Bill Hampel said in a white paper released yesterday. CUNA’s previous estimates showed NCUA assessments averaging 8.2 basis points (bp) per year and FDIC assessments averaging 13.1 bp per year during the coming decade. However, Hampel noted that both the National Credit Union Administration (NCUA) and the Federal Deposit Insurance Corporation (FDIC) have recently released new information. “The NUCA estimates are down slightly; the FDIC estimates for smaller banks (with under $10 billion in assets) have fallen considerably” in the newly created estimates, Hampel said. Credit union assessments could average 7.7 bp over the next 10 years, while bank assessments could average 6.7 bp, Hampel predicted. The NCUA estimates changed in part due to indications that the agency may not charge an insurance premium this year, and may not use a prepayment feature to even out corporate credit union stabilization expensing. Given those two changes, NCUA total assessments will be higher than previously expected in the first two years, but lower in the following nine years. The FDIC has changed its assessment structure, with that regulator transferring much of the burden of rebuilding the FDIC’s fund balance to the very largest institutions. Hampel in the white paper noted that these predicted assessment rates could change. The rate of economic recovery, the performance of legacy assets held by the NCUA, or additional FDIC or NCUA policy changes could alter the course of assessment, he said. For the full white paper, use the resource link.


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