At its May 2021 meeting, the NCUA Board approved a request for comment on the policy and methodology used to set the NOL in response to pandemic-related economic disruptions and the maturity of the NCUA Guaranteed Notes. NAFCU submitted a comment letter suggesting that the NCUA Board use a consistent and transparent methodology based on a three-year forecast horizon. The NCUA Board approved the NOL policy and set the NOL at 1.33 percent at its December 2021 meeting. The NOL policy requires the NCUA Board to seek comment before changing the NOL by more than one basis point. NAFCU opposes assessing a SIF premium and continues to advocate for an NOL of 1.3 percent.
Included in the CARES Act (H.R.748) is a provision allowing the NCUA to increase the share coverage provided by the NCUSIF to any non-interest bearing transaction account. The board has broad discretion in how far they can raise the coverage. This provision expired on December 31, 2020.
2020 NCUSIF Distribution
During its December 2019 Board meeting, the NCUA announced that the NOL will remain unchanged at 1.38 percent. Because the equity ratio ended the year below that level at 1.35 percent, credit unions will not see a distribution in 2020. NAFCU continues to advocate that the agency return the NOL to its customary level of 1.30 percent and return credit union monies.
2019 NCUSIF Distribution
During its December 2018 meeting, the NCUA Board announced it would be decreasing the NOL from 1.39 percent to 1.38 percent, effective immediately. Although NAFCU appreciates this reduction, we continue to fight to lower the NOL to its customary level of 1.30 percent. The NCUA also noted that if the equity ratio as of December 31, 2018 is above the NOL, which would be determined in February 2019, and several other statutory criteria are met, the agency will issue a distribution no later than the end of the second quarter of 2019 sufficient to bring the equity ratio down to the NOL. The NCUA also said it would continue to review the NOL annually.
In March 2019, the NCUA Board approved a $160.1 million equity distribution from the NCUSIF to be paid to eligible credit unions in the second quarter of 2019, as the NCUSIF’s equity ratio was 1.39 percent, above the NOL of 1.38 percent, as of December 31, 2018. Credit unions received their distributions in May 2019.