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NCUA Board Chairman Rick Metsger told Rep. Sean Duffy, R-Wis., in a letter Friday that NCUA's current analysis shows the National Credit Union Share Insurance Fund equity ratio isn't expected to fall to its statutory floor of 1.2 percent before late 2019.

Responding to questions lodged last month by Duffy, chairman of the House Financial Services Subcommittee on Oversight and Investigations, Metsger also said the agency board will decide whether to declare a premium sometime in 2017, noting such decisions typically occur in February or July, coinciding with regular billing cycles.

A premium isn't required under the Federal Credit Union Act unless the fund equity ratio drops below 1.2 percent.

In November, NCUA estimated a potential 2017 premium charge in the range of 3 to 6 basis points. NAFCU opposes a premium charge in 2017 and has said so in letters to NCUA and Congress. It has urged the agency to do all it can to refrain from a premium charge in 2017 and has also urged that NCUA pay a rebate to credit unions on their stabilization assessments as soon as is practicable.

"NCUA's own analysis shows no need to assess a premium before 2019," said Carrie Hunt, NAFCU's executive vice president of government affairs and general counsel. "Much can change over the course of two years. This is an NCUA policy decision if the agency goes ahead and charges a premium prematurely."

The NCUSIF equity ratio was 1.27 percent as of Sept. 30, according to NCUA's most recent quarterly fund report. Unaudited statements for October and November show a small increase to 1.28 percent since then.

Duffy wrote Metsger in December seeking information on the economic modeling NCUA has done to determine the impact of any premium on credit union lending and operations, when it thinks the fund ratio might fall below the normal operating level set by the board (currently, 1.3 percent), factors affecting the ratio and more.

Metsger responded that, among other things:

• A 6bp premium would cause an additional 214 credit unions to report negative earnings at the end of the third quarter of 2016 (in addition to the 1,174 already projected to do so).
• If the Temporary Corporate Credit Union Stabilization Fund were closed and its assets transferred to the NCUSIF under current conditions, the NCUSIF equity ratio could rise by as much as 15bp.
• NCUA is looking at whether to close the stabilization fund early, though it creates the potential for "significant volatility" in the NCUSIF equity ratio if there is any downturn in performance of the underlying legacy assets.

See resources about NCUA finances in NAFCU's NCUA Money Watch.