Share Insurance Premium Assesment FAQ
During the November NCUA Board open meeting, the Office of Examination and Insurance estimated that a share insurance premium of 3 to 6 basis points will be necessary in 2017 to restore the Share Insurance Fund’s equity ratio to the normal operating level of 1.3 percent. Growth of insured shares in credit unions coupled with a continuing low interest-rate environment is causing the Share Insurance Fund’s equity ratio to decline.
The proposed premium range is provided only for credit union budgeting purposes. Credit unions should not actually accrue for a premium until one is approved by the NCUA Board. The Board can vote any time this year to impose a premium assessment or choose to not issue an assessment for 2017.
The Federal Credit Union Act (FCUA) governs the allowable NCUSIF ratio. The FCUA specifically states–The Board may assess a premium charge only if –
1. The Fund’s equity ratio is less than 1.3 percent; and
2. The premium charge does not exceed the amount necessary to restore the equity ratio to 1.3 percent.
Under the FCUA, a premium charge is REQUIRED if the equity ratio falls below 1.2 percent. In the event the equity ratio were to fall below 1.2 percent, the Board would need to assess a premium charge in such an amount as the Board determines necessary to restore the equity ratio to, and maintain that ratio at, 1.2 percent.
Credit unions have not had to pay a premium assessment to the NCUSIF since 2010. There is NO projected assessment under consideration for the Stabilization Fund.
The NCUA Board can vote any time this year to impose a premium assessment or choose to not issue an assessment for 2017.
MCUL & Affiliates supports efforts by CUNA and Sister Leagues to discourage the NCUA from assessing a share insurance premium next year, especially with interest rates on the rise, which should improve NCUA’s investment yields. Because we also know that historically high exam staffing levels are driving the overall budget pressure being experienced by the NCUA, we also support the reduction of NCUA exam staffing levels, which have remained at high levels longer after the recent financial turmoil has passed. By rightsizing staffing levels, the NCUA will reduce payroll expenses, which will take pressure off the NCUSIF.
Please Note: The FAQ is designed to provide an overview of the potential for an NCUSIF premium in 2017.Go to main navigation