ALEXANDRIA, Va.-NCUA said last week the reserve ratio for the National CU Share Insurance Fund continued to fall again last month, even as the agency was collecting $720 million in a special NCUSIF premium assessment.
The agency had hoped the special assessment would replenish the reserve ratio to 1.30 (dollars reserved per $100 of insured deposits) but continuing payouts on credit union losses diminished the ratio to 1.28 at the end of October, and again to 1.27 at the end of November, according to Mary Ann Woodson, chief financial officer for NCUA. "Since there have been additional losses that has driven the (reserve) ratio down," Woodson told the NCUA Board during its monthly open meeting.
The Federal CU Act requires that NCUA maintain a reserve ratio of at least 1.20% for the NCUSIF and the Corporate Stabilization act authorizes an even lower ratio of 1.0%, but the NCUA Board voted last January to maintain a 1.30% ratio.
The diminished reserve ratio raises the specter of additional charges for credit unions next year to rebuild reserves.
Meantime, NCUA Chairman Deborah Matz said last week the Board will consider lowering its desired reserve level form the current 1.30 next year after it considers the related circumstances, including additional losses among natural person credit unions and industry growth, among other things. Matz's position was explained in a letter to NAFCU.
This year's $720 million premium assessment was in addition to a $330 million charge assessed credit unions to pay for the corporate credit union bailout. NCUA predicted earlier that more charges will be required next year and the year after to pay for the corporate credit union bailout and to replenish NCUSIF reserves.
The NCUSIF recorded $96.4 million in losses last month to pay for growing losses on natural person credit unions, bringing year-to-date losses to $546.7 million. So far, there have been 24 natural person credit union failures in 2009, including 14 involuntary liquidations and eight purchase and assumption (assisted) mergers which have cost NCUA $116 million to resolve, according to Woodson.
