Economic Update examines SIF premium possibilities

April 2, 2021

CUNA Chief Economist Mike Schenk examines the chances of NCUA issuing a National Credit Union Share Insurance Fund premium and other topics in this month’s Economic Update video. NCUA Chairman Todd Harper said at the agency’s February meeting that the agency may no longer be able to avoid charging a premium.

“The [share insurance fund equity] ratio finished last year at 1.26%. The folks that run the insurance fund over at NCUA are only required to charge a premium if the fund ratio falls below 1.2%. They cannot, by statute, charge a premium if the ratio is above 1.3%. What we think is gong to happen, in the not too distant future, is that after the NCUA basically sends out invoices requiting ach credit union to “true up” its 1% deposit, that we will see the fund ratio rise from about 1.26% at the beginning of the year to about 1.31%. If that’s the case then the NCUA would be prohibited from charging a premium.”

Schenk added that other things will also factor in, including an increase in longer-term interest rates, and asset quality deterioration when pandemic relief measures start to fade away.

The video also features a look at how recent economic activity has compared with CUNA’s projections and information on credit union member and non-member financial benefits in 2020.