In a new analysis, NAFCU said that its study considers the merging of the Share Insurance Fund with the Corporate Stabilization Fund, changes to losses in reserves, the $736 million distribution from the Share Insurance Fund last year and the failure of credit unions with a high level of taxi medallion loans.

NAFCU remains convinced that the Normal Operating Level should be reset to 1.30%, NAFCU Chief Economist and Vice President of Research Curt Long said.

"This increase in the NOL was a key concern for NAFCU at the time that NCUA's merger plan was proposed and was a major reason why NAFCU ultimately opposed the merger," Long said

The increase in the Normal Operating Level effectively reduced the amount of the 2018 Share Insurance Fund distribution to credit unions by roughly $1 billion, according to NAFCU officials.

"In raising the NOL to an unprecedented level, NCUA provided no assurances or timeline for unwinding it," NAFCU officials said, in their analysis. And they said that the one basis point decrease in the level at the end of last year "inspires little confidence" that the level ever will return to 1.30%.

"Rather, it appears likely that the NOL is permanently unmoored from its traditional level," they said.

Still, NAFCU warned that while taxi loan losses have so far been concentrated in the Nork York metropolitan area, the decrease in the value of the medallions could impact credit unions elsewhere.

Last year, the NCUA board was told that the Share Insurance Fund's reserves had dropped $744.9 million as a result of the failure of two credit unions—Melrose Credit Union and LOMTO Federal Credit Union.

The agency was forced to assume control of hundreds of millions of dollars in loans backed by taxi medallions whose value has dropped in recent years.

In its analysis, NAFCU prepared scenarios in estimating a possible Share Insurance Fund distribution.

Under an optimistic scenario, there would be moderate share growth, reductions in insurance loss reserves and improvement in the value of corporate legacy assets.

That would yield a distribution of $200 million in 2019.

The pessimistic scenario assumes more insurance losses as a result of taxi medallion loans, combined with the impact of an economic downturn.

That could allow a small distribution of less than $50 million in 2019 and could result in no distributions in future years.

NCUA officials had no immediate comment on the NAFCU report.

However, at last month's agency board meeting, officials made it clear that they set the operating level at a figure that would allow the agency to withstand a moderate recession.

If the operating level exceeds the level the board sets, federal credit unions may receive a dividend.

When the board increased the Normal Operating Level at 1.39%, credit unions said the increase was excessive.