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NCUA Assessment at 12.4 bp corp. CU rule Sept. 24
ALEXANDRIA, Va. (9/17/10)--The National Credit Union Administration (NCUA) approved a 12.42 basis point National Credit Union Share Insurance Fund (NCUSIF) assessment at its Thursday open board meeting. Chairman Debbie Matz said, "I assure all stakeholders that the decision to charge this premium is not taken lightly. We understand that 2010 has been a challenging year. Many credit unions are struggling to contain costs. "But I can say unequivocally: This premium is absolutely necessary to replenish the share insurance fund to a level that will protect America's 90 million federally insured credit union members. Members who have kept their savings within the federal coverage limit have never lost a penny--and we intend to keep it that way." Matz said that the NCUA considered the current economic, employment, and credit union CAMEL Code conditions while making its assessment-premium determination. The 12.42-basis point assessment will be based on the total amount of federally insured shares held as of June 30. However, the assessment levied on credit unions with assets of $50 million or less will be based on the amount of federally insured shares held as of Dec. 31, 2009. Agency staff said the premium will increase the NCUSIF's equity ratio to 1.3%, and will replenish the NCUSIF with an estimated $933 million in funds. However, the NCUA warned that the NCUSIF equity ratio will immediately begin to decline: "The forward looking analysis shows the premium is sufficient to maintain the level above 1.2% through June 30, 2011, while falling to 1.17% by year-end 2011." Credit Union National Association President/CEO Bill Cheney said that while the premium “could have been somewhat lower,” the 12.42 basis point premium appears reasonable “under current circumstances.” The NCUA has not determined whether or not a similar assessment would be charged in 2011, and Matz said that the most important factor affecting the likelihood of any future assessments is the performance of individual credit unions. (For more of Matz’s statement, use the resource link.) The NCUA on Thursday sent a Letter to Credit Unions (No. 10-CU-17) detailing how those credit unions can plan and account for the expense of the NCUSIF premium. Credit unions can expect an invoice in October, and will be required to pay their assessments in November, the NCUA added. The NCUSIF also impacted another aspect of the NCUA’s practices, as the board unanimously approved a motion to use the accounting standards promulgated by the Federal Accounting Standards Advisory Board (FASAB) to monitor the status of the NCUSIF. According to NCUA staff, the FASAB standards would create a “more appropriate financial presentation” for the NCUSIF, and would give a clearer view of the NCUSIF’s condition to prime stakeholders. The FASAB standards are the “preferred” accounting standards for most federal entities that report to Congress and the Office of Management and Budget. The current status of the NCUSIF and the Temporary Corporate Credit Union Stabilization Fund were also covered during the meeting, with NCUA Chief Financial Officer Mary Ann Woodson reporting little change in the number of CAMEL Code 4/5 credit unions, or the percentage of total shares held by those credit unions. Finally, the NCUA announced that it will release its widely anticipated corporate credit union regulatory and legacy asset plans at a Sept. 24 special open meeting.
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