NCUSIF Normal Operating Level Lowered to 1.38 Percent

The National Credit Union Administration (NCUA) Board lowered the normal operating level for the National Credit Union Share Insurance Fund (NCUSIF) from 1.39 percent of insured shares to 1.38 percent of insured shares.

The NCUSIF normal operating level will be set by the NCUA Board between 1.20 percent and 1.50 percent, according to the Federal Credit Union Act.

NCUA stated that setting the normal operating level at 1.38 percent would insure that the NCUSIF equity ratio would not fall below 1.20 percent under a moderate recession scenario. If the equity ratio drops below 1.20 percent, NCUA would be required by law to assess premiums.

NCUA assumed that a moderate recession would cause a 13 basis point decline in the NCUSIF equity ratio.

NCUA estimates that the value of the NCUSIF's claim on the corporate estate is 2 basis points in a moderate recession, down from 4 basis points.

Finally, investment income to the NCUSIF fell as its investment portfolio shrank, because of the resolution of a large credit union. The estimated decline in the equity ratio was 3 basis points.

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