NCUA Credit Union Share Insurance Fund Premium

Due to NCUA's projected decline in the NCUA Credit Union Share Insurance Fund (NCUSIF) equity ratio, agency staff has recommended a premium charge to credit unions in 2017 of three to six basis points. The premium charge would be in an effort to return the equity ratio to the normal operating level of 1.3 percent from its 2017 projections of 1.24 to 1.27 percent.

It's important to note that none of NCUA's projections have indicated that the equity ratio would fall below the statutory minimum of 1.2 percent in 2017.

NAFCU's analysis (shared with NCUA in August 2016) revealed that under base-level and optimistic predictions, there is no need for a premium charge in 2017. It was only under a scenario of dire economic conditions mirroring The Great Recession—an extremely low-probability event—did the modeling show the equity ratio falling to the statutory floor. View details of our latest NCUSIF analysis and forecast.

*The Emergency Economic Stabilization Act of 2008 increased the amount of insurance coverage on all accounts up to $250k.

NAFCU continues to push NCUA to work diligently in an effort to avoid a premium charge for credit unions in 2017. Recent actions include:

  • December 5, 2016 - NAFCU's Share Insurance, Liquidity and Development Fund Oversight Committee sent a letter to the NCUA Board expressing concerns with the possibility of a premium charge for 2017and encouraging the agency to continue to publically explore all available avenues to negate the need for a premium.
  • December 13, 2016 - Rep. Sean Duffy (R-WI), Chairman of the House Financial Services Subcommittee on Oversight and Investigations sent a letter requesting information from NCUA Board Chairman Rick Metsger on the impact a SIF premium charge could have on credit unions' lending and what the agency itself was doing to improve its operations in an attempt to prevent charging credit unions a premium.

NAFCU's Position on a NCUSIF Premium Charge

NAFCU strongly recommends that NCUA maintain an equity ratio above the statutory minimum of 1.2 percent through prudent management of the NCUSIF, not an unnecessary and costly premium on credit unions in 2017.

Even in a challenging economic environment, there exists a window between the normal operating level (1.3%) and the statutory minimum (1.2%) that allows the NCUSIF to operate through business cycles without requiring NCUA to charge a premium to credit unions, except under severe distress. NAFCU urges prudence on the part of NCUA until such a scenario becomes more of a likelihood.

Background Information

The NCUSIF equity ratio is a general measure of the health of the fund and is calculated as the sum of federally-insured credit unions' (FICU) capital contribution of one percent of their insured shares and the fund's retained earnings, divided by total insured shares. Federal law requires the normal operating level for the NCUSIF to fall between 1.20 percent and 1.50 percent, and the normal operating level for the equity ratio has been set at 1.30 percent since 2007.

If the Share Insurance Fund finishes a year with an equity ratio above the normal operating level, the excess funds are returned to FICUs under ordinary circumstances. If the ratio falls below 1.2 percent, the NCUA board is required to assess a premium charge to restore the ratio to at least that level. However, so long as the equity ratio consistently falls within the statutory range of 1.2 to 1.3 percent then no premium is required.

Recent Regulatory Comment Letters

Read recent letters to NCUA on the important issue of a projected NCUSIF premium charge in 2017.

January 9, 2017 - NAFCU Letter to NCUA on Chairman Metsger's Response to Congressman Duffy

January 6, 2017 - NCUA Chairman Metsger Response to Congressman Duffy

December 13, 2016 - Congressman Sean Duffy Letter on NCUSIF Premiums

December 5, 2016 - NAFCU Share Insurance Committee letter on NCUA's Equity Fund Ratio and 2017 Projections

August 2, 2016 - Letter to NCUA on NCUSIF Equity Ratio

Updated December 2016