ALEXANDRIA, Va. — Industry health and historical trends are key factors that go into the NCUA's calculations and analysis when determining what assessment level is needed to keep the NCUSIF healthy, NCUA Director of Examination & Insurance Melinda Love told the NCUA Board Thursday.
She said her office, which will make a recommendation to the board on the assessment level this fall, said they focus on four factors: The fund's current equity level; projections for the next six to 12 months; an analysis of different assessment levels on the financial health of credit unions; and a recommended target equity level for the NCUSIF.
She warned that the losses in some of the larger credit unions will cause the agency's existing provision of losses may be not be sufficient to cover the fund's needs.
Recommended For You
Love explained that the three key variables for determining equity ratio are the fund's earnings, insured share growth and the level of loss reserves needed to deal with losses caused by failed credit unions.
She noted that the "flight to safety," cause share growth to increase throughout 2009-and did not drop off throughout the rest of the year as usually happens-and the agency expects that trend to continue this year.
On the loss reserves, she said that the agency-which has increased the number of credit unions rated CAMEL 3, 4 and 5 during the last year-determines the loss reserves needed based on "historically based probability of loss," for credit unions with each CAMEL rating.
NCUA Board Chairman Debbie Matz said Love's presentation-and a comparable one about the Temporary Corporate Credit Union Stabilization Fund made by NCUA Deputy Executive Director Larry Fazio-were efforts by the agency to increase transparency on the health of the funds and give credit unions a sense of when the assessments will be announced and what factors go in to calculating them.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
