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The NCUA Office of Inspector General (OIG) determined that "the NCUA's process and basis for recommending the NCUA Board set the [normal operating level] at 1.39 percent was reasonable" after receiving a request that it review the legality of the move, approved last September, and opposed by NAFCU.

Callahan & Associates Inc. asked the NCUA OIG to determine "the legality of the NCUA Board's approval" to transfer funds from the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) to the National Credit Union Share Insurance Fund (NCUSIF) and increase the normal operating level (NOL) of the NCUSIF from 1.3 percent to 1.39 percent.

While the OIG determined that is was not within its purview to rule on the legality of the board's decision, it did evaluate the board's rationale for the move by reviewing applicable legislation and the process for setting the NOL at 1.39 percent. The OIG also compared the NCUA's rationale for this move to the FDIC's when it recommended increasing the Deposit Insurance Fund's Designated Reserve Ratio in 2011.

NAFCU was the only trade association fighting to keep the NOL at 1.3 percent so credit unions could realize the fullest distribution possible from the NCUSIF; the association continues to urge the NCUA to return the NOL to that level as soon as possible.

During Thursday's NCUA Board meeting, the agency announced that credit unions will receive a distribution of $735.7 million in the third quarter of this year from the NCUSIF. This distribution is the result of the merger of the TCCUSF with the NCUSIF.

Based on NCUA's figures, the increase in the NOL to 1.39 percent will result in the additional retention of approximately $980 million in the NCUSIF. These funds would have been added to the distribution to credit unions if NCUA had not increased the NOL.

"While the 2018 distribution is a positive development which returns funds that rightfully belong to credit unions' members, NAFCU has consistently pushed for the agency to return as much money back to credit unions as possible," NAFCU President and CEO Dan Berger said in a message to credit unions last week following the NCUA Board meeting. "That is why NAFCU was the only trade association advocating for the agency to leave the normal operating level at 1.3, which would have resulted in a larger pay-out to credit unions.

"We appreciate the agency's efforts to finalize the 2018 distribution, but we will continue to strongly advocate for the agency to pursue future distributions to credit unions from the NCUSIF and return the NOL to 1.3 as soon as possible," he added.

Credit unions can learn the amount of the distribution they will receive from the NCUSIF this year with NAFCU's updated SIF calculator (member only). The calculator reflects the latest figures shared during Thursday's open NCUA board meeting.