Federally insured credit unions will receive a $735.7 million “distribution” as early as July, the National Credit Union Administration (NCUA) Board was told Thursday, the result of a dividend from the federal insurance fund that insures savings in the cooperative financial institutions.
In a report to the NCUA Board at its regular monthly meeting, staff told the panel that the agency remains on track to the pay the dividend in the early part of the third quarter (that is, after June 30), which was declared by the agency board in February. The distribution will be paid to those credit unions insured by the National Credit Union Share Insurance Fund (NCUSIF) for the year ending Dec. 31, 2017. The payment will leave the NCUSIF at an equity ratio of 1.39%, which is the fund’s normal operating level (NOL), set by the board last fall.
The dividend became possible after the board’s decision last October to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF, a fund sent up in the wake of the housing crisis of 2009-10 to resolve troubled corporate credit unions; i.e., credit unions that serve other credit unions). Last summer, the board proposed closing the fund, merging its remaining assets into the credit union savings insurance fund (the (NCUSIF), and distributing any funds left over in the insurance fund above the 1.39% NOL.
The board said last fall it closed the TCCUSF because it had “served its purpose of retaining the resolution costs of the five failed corporate credit unions within the credit union system, at no cost to taxpayers.” The distribution of the nearly $736 million is the amount above the NOL of the insurance fund and available to be distributed to credit unions.
At Thursday’s meeting, in response to NCUA Board Chairman J. Mark McWatters regarding the timing of the dividend distribution, staff also noted that it is now testing the processes and systems changes to make the dividend payment, with a goal of “zero defects” in the dividend payment.