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Good News! NCUSIF Premium Is ONLY 0.2582% For 2010

September 24, 2010

The NCUSIF premium was set by the NCUA Board as 0.1242% on September 16, 2010.  This brings the total NCUSIF refunding cost for 2010 to 0.2582% when the 0.1340% for corporate stabilization is included.  This is in the middle of the 15 to 40 basis point (bps) range originally projected by the NCUA in November 2009.  Before you pass out party favors at your next board meeting, however, consider some of the comments made by the NCUA upon releasing this information:

  • CAMEL 4 and 5 federally insured credit unions (FICUs) increased to 366 from 291 in June 2009 for an increase of 25%.  Total assets for these credit unions increased $20 billion or 74%.  This indicates some larger credit unions have entered this group¹
  • The combined 0.2582% premium will cost FICUs $1.9 billion or 2.3% of their net worth²
  • “…NCUA is stepping up enforcement actions – to control the costs of troubled credit unions before those charges must be passed on to all credit unions³

Considering these comments and the state of the economy, it isn’t time to have a party just yet.  In fact it is even more important now to consider various possible scenarios as you work on your 2011 budget and longer-term financial plans.  Those of you who are regular readers of this blog (we thank you) know we are great proponents of scenario testing.  This has not changed—the use of 26 bps of insured shares would be a prudent base forecast; we also suggest that you consider scenarios at both ends of NCUA’s 15 to 40 bps projection for NCUSIF refinancing costs.  In addition to identifying the potential impact on your earnings, this will help you begin to think about possible contingency plans if the higher end of the range comes to pass.

¹NCUA Board Meeting Minutes 09/16/10

²IBID

³NCUA Chairman Debbie Matz Statement, Share Insurance Fund Premium, 09/16/10

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