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ALEXANDRIA, Va.-NCUA Chairman JoAnn Johnson approved a final rule as the only sitting member of the NCUA Board and received the quarterly insurance fund report. After noting International Credit Union Day, the chairman got down to business. She tackled the non-controversial task of approving the increase in the deductibles and coverage for fidelity bonds and insurance for federal credit unions. The final rule is similar to the original proposal from May. It would increase the maximum coverage for fidelity bonds to $9 million, as well as raise the permissible deductible for credit unions with assets over $200 million that qualify under RegFlex. The new maximum deductible is $200,000 or $1 million for RegFlex eligible credit unions. The rule also eliminated the listing of approved bond forms and carriers and, instead directs credit unions to the agency’s Web site (www.ncua.gov) where it will be easier to update. In addition, it includes a technical direction to an incorrect reference of a related regulation. Due to one less calendar day, the NCUSIF’s gross income was down slightly from last month but the overall trend has been up over the last 12 months. “We’re in a rising interest rate environment,” NCUA CFO Dennis Winans explained at the October board meeting, “and we should continue to see our income rise throughout the rest of the year.” Expenses were up to $9.5 million for the month, from 7.3%, but he explained that was due to the beginning of reporting of accruals for the year. In the end, NCUA’s net income is projected to end the year at $60 million, well above last year’s $47.4 million and $28.9 million in 2003. Insurance loss expenses have actually been higher than what was projected; actual expenses have been $18 million while only $13.5 million was budgeted. The agency has yet to feel the effects of Katrina and Rita, and potentially Wilma, in the insurance fund. Winans assured the agency is unlikely to be forced to assess a premium for 2006 at this point. The equity fund ratio should end the year at 1.27%, according to Winans, so a dividend is not in federally insured credit unions’ future. CAMEL 4/5 credit unions now account for 1.2% of insured shares, which stands out as high over the last decade, but, Winans said, “I still consider this a very manageable level of insured shares.” He pointed out that the ratio was much higher in the last 1980s and early 1990s. At the close of the meeting, Chairman Johnson also pointed out that NCUA has changed the date of its upcoming board meeting in light of the potential for two new board members. The new date will be Tuesday, Nov. 29. -

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