The program has been modified from what was proposed on May 19 by the NCUA Board.
Initially, NCUA proposed that participating credit unions could make a voluntary advance to the Stabilization Fund of up to 36 basis points of the credit union’s insured shares, representing about three years of estimated average Stabilization Fund assessments. The minimum contribution was $10,000 from each participating credit union. To go forward with the program, NCUA needed at least $300 million in commitments. The maximum that could be raised if all eligible federally-insured credit unions participated was $2.8 billion.
The NCUA made several modifications to the prepayment program.
- The minimum individual credit union participation amount is the greater of $1,000 or 0.05 percent of insured shares as of March 31, 2011. By lowering the minimum contribution from $10,000 to $1,000, this will allow virtually all credit unions to participate in the program.
- The maximum individual credit union participation amount is 0.48 percent of insured shares as of March 31, 2011. NCUA estimates that this is equivalent to 4 years of assessments.
- The size of the Program is set at $500 million, which equates to 6.4 basis points. If NCUA receives less than $500 million in commitments, the program will not be initiated. If NCUA receives more than $500 million in commitments, the prepayments will be accepted on a pro rata basis to meet the $500 million target.
Features that are unchanged in the program include: the prepaid balance will be a non-earning asset and NCUA will apply the prepaid account against TCCUSF assessments beginning in 2013.
Credit unions will have to decide by July 29 whether they plan to participate in the program. On August 9, NCUA will e-mail credit unions that submitted agreements to participate in the prepaid assessments about results of aggregate commitments. If NCUA receives the $500 million commitment, NCUA will process a direct debit of the credit union’s account on August 18.
Read the draft Board document.
Read the terms and conditions.