Ncusif perks up.
She told the board meeting that any funds above 1.3% would be transferred to the Temporary\42 Corporate Credit Union Stabilization Fund. The agency would then do an analysis of the cash needs of the fund and determine whether it can lower the assessment level for next year.
The NCUSIF's equity ratio was 1.3% in July and August.
At the request of NCUA Chairman Debbie Matz, Woodson will present updated projections at the board's November meeting so the board can give a range for next year's assessments for paying for the rescue of corporate credit unions. This year's assessment was 25 basis points and last year's was 12.4 basis points.
The improved health of the fund is because there have been fewer credit union failures this year. There have been 13 natural person credit union failures through the end of August, and they have cost the fund $46.8 million. Of those, 12 have been involuntary liquidations, and one was an assisted merger. There were 28 credit union failures in 2010.
NAFCU Vice President and General Counsel Carrie Hunt said she was "pleased to get some good news about the NCUSIF. We believe that any additional money should go back to credit unions in terms of lower assessments."
The board also approved a rule allowing assistance from the agency to a troubled credit union or a CU acquiring a troubled credit union to count as regulatory net worth.
The final rule contained a provision, to which several trade associations and credit unions objected, to deduct "bargain purchase gain" in certain credit union mergers from regulatory net worth. The term refers to a gain on financial assets acquired for less than fair market value.
Karen Kelbly, the chief accountant of the agency's Office of Examination and Insurance, said in response to a question from Matz that the definition change wouldn't negatively impact the number of credit union mergers. She said, based on the analysis of 11 mergers in 2010 in which this would have been an issue, it would have only have had a negligible impact on the credit unions involved.
Under the new rule, the retained earnings of the acquired credit union must be measured under generally accepted accounting procedures.
In addition, the agency decided not to require credit unions that receive such assistance to list it on their Call Report. Kelbly said that publicizing such information "might cause the public to be un-necessarily alarmed" and move their money to other financial institutions.
The rule also mandates that the NCUSIF equity ratio must be based solely on the financial statements of the NCUSIF and not combined with other financial statements.
The NCUA board also gave the director of the Office of Corporate Credit Unions several additional powers to implement the new corporate credit rule that the board approved last year. Many of the provisions take effect in October.
The new powers include the authority to approve or disapprove corporate credit union retained earnings accumulation plans; the right to approve a corporate credit union releasing nonperpetual capital accounts to payout shares in a liquidation; the power to approve or disapprove a corporate credit union redeeming nonperpetual capital accounts before maturity; the power to approve or disapprove a corporate credit union releasing perpetual contributed capital instruments to facilitate the payout of shares during a liquidation; the authority to establish minimal capital requirements; and the authority to take all required or authorized requirements with respect to capital restoration plans.
Read more on about the NCUA board meeting at ncua.gov