In a turnabout, the $481 million Velocity Credit Union of Austin, Texas has decided against switching coverage from the NCUA to a private carrier, American Share Insurance of Ohio.
In a statement, Velocity said even though members had approved the conversion in a recent vote, its board decided to remain with the NCUA based on ASI's year-end announcement that it was forced for the first time to start assessing member CUs following losses in 2009 with possibly more to come in 2010.
"One of our primary reasons for considering a conversion to ASI was because they had not charged a premium in their 35-year history," said Velocity President/CEO Debbie Mitchell. "However, on the final day of Velocity's member vote to convert, ASI announced an assessment of its credit unions for the exact amount of the NCUA assessment: 0.15% of each credit union's deposits." That assessment, she noted, did not include Velocity.
In 2009, due to estimated losses in the National Credit Union Share Insurance Fund, Velocity, she said, was assessed a $675,000 premium or 0.15% of total shares.
Following ASI's announcement of the assessment, Velocity's board "reviewed this new information and decided not to convert" and has now notified its members, the Texas Credit Union Department, the NCUA and ASI of its decision. Officials from the NCUA and ASI were not immediately available for comment.
The Velocity move comes a day after the $300 million SafeAmerica CU of Pleasanton, Calif. disclosed it opted to switch out of NCUA last December to ASI based on similar reasons.