15 basis points assessed for NCUSIF, stabilization
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NCUA Chairman Debbie Matz (center) presided over her first meeting as chair yesterday. (NAFCU photo)
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Sept. 25, 2009 - Insured credit unions will pay an amount equal to 0.15 percent of total insured shares this fall to keep the National Credit Union Share Insurance Fund’s equity level at 1.3 percent and repay a portion of funds borrowed from Treasury by the Temporary Corporate Credit Union Stabilization Fund.
The NCUA Board, meeting yesterday, approved allocating $727.5 million of the total assessment to the NCUSIF premium and $337.8 million to the stabilization fund. The stabilization assessment is equivalent to $310 million in fund borrowings (out of a total $1.1 billion borrowed) plus accrued interest as of June 30.
The premium assessment equals 0.1027 percent of insured shares and accounts for the increased share insurance limit of $250,000; the insured-share base used is as of Dec. 31, 2008, for credit unions with less than $50 million in assets and June 30, 2009, for those with $50 million or more. The stabilization assessment equals 0.0473 percent of insured shares as of June 30, for all insured credit unions.
Invoices for the premium and stabilization assessments will be sent in October; those will also address adjustments to the 1 percent NCUSIF deposit. All payments will be due in November.
Further credit losses are expected for the corporates, and insurance losses will rise, but NCUA is not giving specific estimates for 2010 and beyond, largely because such information may lead to credit unions having to recognize them when they are stated.
NCUA is authorized to spread out repayment of stabilization costs over seven years. Insurance premiums can be spread over eight years, and added premiums may be coming in 2010 and 2011, Love noted. Matz said she would be asking for some indication of future costs in next month’s board meeting.
NAFCU continues to press NCUA to provide more transparency with regard to projected corporate and natural-person credit union losses and their potential impact on the NCUSIF.
Insurance losses to rise
NCUA Chief Financial Officer Mary Ann Woodson said NCUA is pressing to maintain the fund at 1.3 percent, its normal operating level, to prevent future assessments to cover insurance losses.
In her monthly NCUSIF report, Woodson said the fund has incurred $356.5 million in insurance-loss expense this year, through Aug. 31. The provision for natural-person credit union losses totals $523.7 million; $107.9 million of that is allocated to specific cases.
The number of credit unions with CAMEL codes of 4 or 5 rose to 315 in August; that’s an increase of 44 for the year. The net increase includes 141 additions to the list this year and 97 drops.
Of the 97 drops from the 4s-and-5s list, 42 were credit unions that improved their scores and 55 were merged or liquidated. Year to date, 17 credit unions have failed.
The potential impact of Code 4 and 5 credit unions is also growing: They hold 4.56 percent of insured shares and about 5 percent of all natural-person credit union assets.
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