ALEXANDRIA, Va. -- The NCUA Board has approved an assessment of 12.42 basis points that federally insured credit unions must pay to shore up the NCUSIF, which has seen its assets drained because of losses in the credit union system.
As of Aug. 31, the equity ratio for the NCUSIF dropped to 1.176%, according to the NCUA's board action memorandum. When the fund falls below 1.2% it must publish a restoration plan in the federal register. The premium will bring the equity ratio back up to 1.3% but that's expected to decline again because of continued strains on the fund.
The board voted on the assessment at this morning's 10 a.m. ET meeting.
NCUA Chairman Debbie Matz said the decision to charge the premium wasn't "taken lightly, but it was needed to protect the interest of more than 90 million credit union members and to prevent the reputation risk to credit unions."
The assessment is on top of a 13.4 basis point assessment levied earlier this year to help the Corporate Stabilization Fund repay the Treasury Department.
The combined assessments will cost credit unions $1.9 billion, representing 2.3% of federally insured credit unions' net worth as of Dec. 31, 2009. Industry wide ROA for 2010 is expected to fall 22 basis points, according to the NCUA.
This is the second consecutive year that the NCUA has had to levy assessments. In 2009, the combined Stabilization Fund and NCUSIF assessment was 15 basis points.
The newest assessment will be billed and due later this year.