Harper: SIF premium not ‘if’ but ‘when and how much’

February 19, 2021

The NCUA board adopted a final joint share ownership accounts rule and heard a briefing on the state of the National Credit Union Share Insurance Fund (NCUSIF) at Thursday’s meeting. The meeting also featured a briefing on the Emergency Capital Investment Program (ECIP).

The NCUSIF ended 2020 with a total income of $60.9 million and net loss of $13.7 million, and the fund’s equity ratio stands at 1.26% as of Dec. 31. The primary driver of the decrease in the ratio is faster growth in insured shares.

NCUA Chairman Todd Harper said the agency’s top priority this year is to ensure credit unions and the NCUSIF are prepared to weather any fallout from the pandemic.

“I recognize charging a premium during the pandemic and economic downturn is not ideal, however we may no longer be able to avoid it,” he said. “With the growth of shares likely to remain elevated in 2021, it’s increasingly clear the question is no longer if we have to assess the share insurance fund premium, but when and how much.”

He added that any future decision on a premium would be data-driven and that the board must analyze and evaluate several potential scenarios.”

CUNA has opposes a premium assessment at this time and urges NCUA to refrain from taking such action to address a temporary issue.

Final joint ownership share accounts rule

The CUNA-supported final rule provides an alternative method to satisfy the membership card or account signature card requirement necessary for insurance coverage.

If a credit union cannot produce membership cards or account signature cards signed by the joint accountholders, the signature card requirement can be satisfied by information contained in the account records of the credit union establishing co-ownership of the share account under the final rule.

The rule will become effective 30 days after publication in the Federal Register.

ECIP briefing

The ECIP was created by the Consolidated Appropriations Act to encourage low- and moderate-income community financial institutions, including Community Development Financial Institutions and Minority Depository Institutions, to augment their efforts to support small businesses and consumers in their communities.

The total appropriated amount for the ECIP is $9 billion.

A credit union applying for ECIP funds in the form of Subordinated Debt that is also a LICU may submit a Secondary Capital plan to recognize the ECIP investment amount as Net Worth. The Secondary Capital application is separate from the (Treasury) ECIP application.

Complete coverage of the meeting can be found on CUNA’s Removing Barriers Blog.