CU share insurance fund op level lowered to 1.38%; February review will show any need for distribution

Board issues Final Regulatory Reform Task Force report

A one-basis-point reduction, from 1.39% to 1.38%, in the “normal operating level” (NOL) of the federal share (deposit) insurance fund for credit unions was approved by the National Credit Union Administration (NCUA) Board Thursday on a unanimous vote of 2-0 – action that could, depending on final year-end data, set the stage for a small fund distribution to insured credit unions next year.

The equity ratio of the fund – the National Credit Union Share Insurance Fund (NCUSIF) – is figured by dividing the fund’s actual retained earnings plus actual contributed capital by actual total insured shares. NCUA says the NCUSIF’s equity position and the total amount of insured shares as of Dec. 31, 2018, will be available by Feb. 15, 2019, when the fund’s audited year-end financial statement is published and credit union call report data is final.

(In the two-minute video, NCUA Board Member Rick Metsger discusses the lower “normal operating level,” an annual review, and the impact on a “dividend” to credit unions in 2019)

If, after all this is evaluated, the fund’s equity ratio is higher than 1.38% and other statutory requirements are met, a fund distribution will be made to insured credit unions by the end of the second quarter of 2019, NCUA says.

In other action Thursday, the board approved the second and final report of the agency’s Regulatory Reform Task Force (created to comply with the spirit of a 2017 presidential order for reducing regulatory burden); and a set of technical amendments to the agency’s rules and regulations that will take effect upon publication in the Federal Register. It also received a briefing by an agency working group on blockchain and distributed ledger technology.

In its final report from the Regulatory Reform Task Force, NCUA says it has completed 10 of the first report’s initial regulatory relief recommendations (from 2017), addressing corporate credit unions, emergency mergers, securitization, the NCUA Supervisory Review Committee, appeals procedures, equity distributions from the NCUSIF, capital planning and stress testing, accuracy of advertising and notice of insured status, field of membership, and risk-based capital. It has also proposed rules or begun action for recommendations regarding the federal credit union bylaws, loan maturities, the single borrower/group of associated borrowers limit; appraisals; and fidelity bonds.

The NCUA began implementing Tier 1 of its reform agenda in May 2017 and plans to have commenced action on all Tier 1 recommendations by May 2019. It plans to initiate implementation of Tier 2 and Tier 3 recommendations in May or June 2019 and 2020, respectively. It also plans to resume its three-year rolling review of regulations in 2019.

Briefing document on NCUSIF NOL

Final report of Regulatory Reform Task Force and notice for Federal Register

Technical amendments to regulations (Draft Federal Register notice)

Briefing on blockchain and distributed ledger technology