January 28, 2021

NAFCU analyzes SIF, potential for a premium charge in 2021


NAFCU's award-winning research team has released an updated analysis of the National Credit Union Share Insurance Fund (NCUSIF). NAFCU believes the fund entered the COVID-19 pandemic in a strong position and expects the equity ratio will remain under moderate stress in 2021 due to strong share growth and low interest rates.

The updated analysis reviews the NCUSIF performance in 2020, the prospects for a premium charge in 2021, and some long-term issues to watch.

NAFCU Chief Economist and Vice President of Research Curt Long also notes the NCUA’s forecast that the equity ratio would end 2020 just above 1.3 percent. As long as that is the case, the NCUA board is not permitted to assess a premium. The association has also advised the agency against a premium assessment – as credit unions have seen significant share growth amid the pandemic – and advocated instead for additional investment authorities.

NAFCU continues to urge the board to return the normal operating level (NOL) to its historic level of 1.3 percent. The agency is expected to convene a working group next year to assess the methodology for setting the NOL and solicit comment during that process.

"While a distribution is unlikely under any scenario in 2021, adopting [a punitive NOL methodology] makes it much less likely that a distribution is initiated in the future, and if it is, the amount would be much lower than under the current method," Long says.

View the full member-only analysis.