WASHINGTON (11/16/12)--The 2013 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment will likely be between eight and 11 basis points (bp), and a National Credit Union Share Insurance Fund (NCUSIF) premium may not be assessed next year, the National Credit Union Administration (NCUA) announced at its Thursday open board meeting.
The NCUSIF assessment, the agency said, could be zero or as much as five bp.
Credit Union National Association (CUNA) Chief Economist Bill Hampel said the NCUA's TCCUSF assessment range is surprising.
"Based on the latest estimates of total remaining losses to be covered on the legacy assets posted by NCUA just last month, annual assessments of eight bp to 11 bp would cover the midpoint of expected losses in just 3.5 to 4.5 years. That seems unnecessarily short considering the stabilization fund has nine years remaining," he said.
Credit unions have already paid $4.1 billion in TCCUSF assessments, and the NCUA recently reduced the projected cost of corporate credit union stabilization assessments to between $6 billion and $8.9 billion. This represents a $400 million reduction from the previous maximum cost of $9.3 billion.
With the new estimates, credit unions will need to pay between $1.9 billion and $4.8 billion in additional assessments before the stabilization fund expires in 2021.
CUNA had suggested a 2013 assessment of closer to five bp, saying that level of TCCUSF assessment "would be sufficient to responsibly make headway on paying down the fund, pending further information on what the ultimate losses will actually be."
The NCUA expects to decide the level of the TCCUSF assessment next July, as it has done in the past.
The agency on Thursday also modified the Overhead Transfer Rate (OTR) for 2013 to 59.1%. The current OTR is 59.3%.
Under the Federal Credit Union Act, the NCUA may transfer funds from the NCUSIF to fund its administrative and other expenses related to federal share insurance. NCUA uses the OTR to allocate those expenses.
The agency will be reviewing the definition of what is "insurance-related" and may incorporate any changes in that definition when it sets the OTR for 2014.
According to the agency, the planned 2013 modification in the OTR is due to the following factors:
- Modification of the state supervisory authority (SSA) Imputed Value calculation to include certain costs;
- The 2013 workload budget for federal examination and supervision was reduced by over 1,794 hours;
- The 2013 workload budget for state examination and supervision increased by over 8,191 hours;
- Examiners reported spending 67.3% of their examination and supervision time on insurance related procedures for the time survey ending in 2012, compared to 65.1% in the previous survey cycle; and
- The 2013 budget of $251.4 million for the cost of NCUA resources and programs increased over the previous year's budget of $236.9 million.
For more on the NCUA meeting, use the resource link.