WASHINGTON—If NCUA were to change the NCUSIF assessment base from insured shares and deposits to total assets minus net worth, only 456 natural-person credit unions would see their portion of the NCUSIF assessment base increase as of the end of 2014, reports Keith Leggett.
“This would mean these credit unions would pay higher deposit insurance premiums, if assessed and the aggregate premium payments are revenue neutral,” wrote Leggett on his blog. “All other credit unions would either see a reduction or no change in their share of the NCUSIF assessment base.”
Leggett, who recently retired from the American Bankers Association, first reported on his blog the existence of a 2013 NCUA white paper that recommends that Congress reform the NCUSIF—establishing a risk-based NCUSIF premium system and approving legislation to remove the statutory cap from the NCUSIF equity ratio.
Leggett broke down the impact the new NCUSIF assessment base formula would have if put in place this year:
- Two credit unions with more than $10 billion in assets would see their portion of the NCUSIF assessment base increase with the change.
- Eleven credit unions with assets between $5 billion and $10 billion would experience an increase in their portion of the NCUSIF assessment base.
- For credit unions with assets between $1 billion and $5 billion, 86 credit unions would encounter an increase in their share of the NCUSIF assessment base, wrote Leggett.
- The portion of the assessment base for 63 credit unions with assets between $500 million and $1 billion would increase.
- Sixty-two credit unions with assets between $250 million and $500 million would experience an increase in their share of the assessment base.
- For credit unions with between $100 million and $250 million, 85 would see their portion of the assessment base grow.
- Finally, 147 small credit unions would see an increase in their share of the NCUSIF assessment base, Leggett noted.
In the white paper, NCUA stated that the normal operating level, currently set between 1.2% and 1.5% of insured shares, with the NCUA board traditionally setting the normal operating level at 1.3% of insured shares, won’t work in the future.
NAFCU CEO Dan Berger said the trade association is “deeply concerned the agency’s recommended changes would be costly and exacerbate the burden on an already extremely safe and sound industry – an industry that did not cause the financial crisis.”
Berger noted that in February of 2015 NAFCU wrote to NCUA and requested that it fully disclose its long-term plan for mitigating perceived risk in the credit union industry.
“We specifically noted NCUA’s legislative priority of establishing risk-based share insurance premiums-a priority that was buried in a footnote of NCUA’s congressional testimony in February before the Senate Banking Committee,” said Berger. “In her response, NCUA Chairman Debbie Matz specifically did not address the agency’s ideas for legislative reforms to the share insurance fund. NAFCU is carefully reviewing the September 2013 white paper to assess the full impact these legislative reform ideas would have on credit unions and their 100 million members. Like risk-based capital, these issues need to be discussed.”