NCUA Approves Equity Distribution; Will Discuss Final Loan Rule at Meeting

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The National Credit Union Administration (NCUA) Board has approved a $160.1 million equity distribution from the National Credit Union Share Insurance Fund (NCUSIF) that will be paid to eligible credit unions in the second quarter of 2019.

It is the second largest distribution in the history of the share insurance fund—only last year’s distribution was larger. The distribution ultimately stems from closure of the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) in 2017 and management of the NCUA Guaranteed Notes Program.

The Credit Union National Association (CUNA) will be re-posting the share insurance distribution calculator soon so that credit unions can estimate the distribution amount they can expect. 

A financial institution that filed a quarterly call report as a federally insured credit union for at least one reporting period in calendar year 2018 will be eligible for a “pro rata” distribution. The eligibility criteria for credit unions to receive an equity distribution is detailed in a final rule approved by the board in February 2018.

Based on the total of insured shares reported in fourth quarter 2018, the equity ratio of the share insurance fund was 1.39 percent, which is above the board-approved normal operating level (NOL) of 1.38 percent. “To reduce the equity ratio to the approved normal operating level, a $160.1 million distribution is required,” states a news release by the NCUA.

NCUA stated that the board swill continue monitoring the health and risk exposure of the share insurance fund, and will evaluate the NOL each year to determine its appropriate level, based on an analysis of data and trends as they evolve overtime.

Additional information on the share insurance fund’s equity ratio and normal operating level is available on the NCUA’s website.

SIF Update and ‘Loans to Members’ Final Rule
The NCUA Board will meet on Thursday, March 14 at 7 a.m. (Pacific) and discuss the Share Insurance Fund Quarterly Report, as well as a final rule on Part 701 (Loans to Members).

With respect to the final rule, the board issued a proposed rule last August. The proposal asked for comments on whether the agency should provide for longer, more flexible maturity limits for 1 – 4 family real estate loans and for other loans, such as home improvement, mobile home, and second mortgage loans. There were also proposed changes meant to streamline and clarify other aspects of the rule. 

The California and Nevada Credit Union Leagues will monitor the board meeting and provide an update soon after. NCUA Board meetings are broadcast via livestream video and can be accessed from NCUA’s homepage at www.ncua.gov. Open board meetings are also tweeted live; follow @TheNCUA on Twitter. 

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