ALEXANDRIA, Va. – NCUA said last week the reserve ratio for the National CU Share Insurance Fund slipped below 1.2% (dollars reserved per $100 of insured deposits) but the agency was only saved from having to report the deterioration in reserves to Congress because it is expecting tens of millions of dollars in funds over the next three months based on projections of first half growth for credit unions.
The projections of new funds means that instead of the 1.18% of reserves calculated under generally accepted accounting principals, NCUA is projecting a reserve level of 1.21%, Mary Ann Woodson, the agency’s chief operating officer reported last week.
The higher figure saves NCUA from having to return to Congress a little more than a year after lawmakers agreed to create a special $6 billion corporate bailout fund that transferred the liabilities for the corporate problems from the NCUSIF.
The Federal CU Act requires NCUA to provide a fund restoration plan to Congress within 90 days if the reserve ratio falls below 1.2% or is projected to fall below 1.2% at the end of any month.
The additional funds expected to be added to NCUSIF reserves represent the amount needed to bring up the NCUSIF deposit for fast-growing credit unions to 1%. Those payments are projected for September or October, according to Woodson.
NCUA is reviewing a restoration plan which will include another premium assessment on all federally insured credit unions that would replenish the NCUSIF reserves. The agency assessed a $658 million premium last year to replenish reserves, separate from the $1.4 billion assessed credit unions to pay for the corporate bailout fund.
