NCUA Pays Record Dividend — 7/24/18
After years of shoring up the Temporary Corporate Credit Union Stabilization Fund, credit unions got the news they been wanting to hear for some time from the National Credit Union Administration. In a July 17 announcement, the agency said they will begin paying dividends the week of July 23 to more than 5,700 institutions eligible for the $735.7 million Share Insurance distribution.
The NCUA Board gave unanimous approval to the distribution at its February 2018 open meeting. The distribution was possible after the Board voted unanimously at its September 2017 open meeting to close the Temporary Corporate Credit Union Stabilization Fund and transfer the Stabilization Fund’s assets and obligations to the National Credit Union Share Insurance Fund, as required by law.
The Temporary Corporate Credit Union Stabilization Fund was created in May 2009, to accrue the losses from five failed corporate credit unions and assess insured credit unions for such losses over time. But for the creation of the Stabilization Fund, these losses would have been absorbed by the National Credit Union Share Insurance Fund, exhausting the Share Insurance Fund’s retained earnings and significantly impairing credit unions’ one percent contributed capital deposit.
Statements were mailed to dividend recipients the week of July 23, indicating the amounts they will receive. An institution that filed a quarterly Call Report as a federally insured credit union for at least one reporting period in calendar year 2017 will be eligible for a pro rata distribution. The NCUA Board approved a final rule at its February 2018 meeting that details eligibility criteria.
“As we have noted before, this is the largest Share Insurance distribution in this agency’s history,” Board Member Rick Metsger said, “larger, even, than the cumulative amount of all previous cash distributions since the Share Insurance Fund was capitalized. This is a significant benefit to credit unions and will support a lot of provident and productive purposes.”
More information on the Share Insurance distribution, including the method the NCUA used to determine each institution’s share, can be found online here. Information about the Stabilization Fund closure, the transfer of assets and obligations to the Share Insurance Fund, and setting the Share Insurance Fund’s normal operating level at 1.39 percent are all available here.
Prior to the Board’s actions in September 2017 and February 2018, the Stabilization Fund was scheduled to expire in 2021. Net legal recoveries of more than $3.8 billion won by the NCUA on behalf of five failed corporate credit unions decreased the costs to the Stabilization Fund and made funds available for this distribution.
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Source: National Credit Union Administration