NCUA Equity Ratio Drops to 1.26%, Board Does Not Impose Immediate Premium
Harper announces that Monica Davy, director of the Office of Minority and Women Inclusion, is leaving the NCUA.
The NCUA’s equity ratio has dipped to 1.26%, far below the Normal Operating Level of 1.38%, but agency board members did not signal Thursday that they will immediately move to charge credit unions a premium to increase the ratio.
Speaking at his first meeting as chairman, Todd Harper said, however, that a premium may become necessary.
“I recognize that charging a premium during a pandemic and economic downturn is not ideal,” Harper said. “However, we may no longer be able to avoid it. With the growth in shares likely to remain elevated in 2021, it is increasingly clear the question is no longer ‘if’ we have to assess a share insurance premium, but ‘when’ and ‘how much.’”
Also, at Thursday’s board meeting, Harper announced that Monica Davy, director of the NCUA’s Office of Minority and Women Inclusion, is leaving the agency. Harper called Davy an “extraordinary leader.”
During a brief discussion with board members, Harper did not give a reason for Davy’s departure. However, multiple sources familiar with the agency indicated to CU Times that Davy was unhappy with agency management under former Chairman Rodney Hood.
NCUA CFO Eugene Schied told the board that the main cause of the equity ratio drop was an increase in insured shares at credit unions. Agency officials have said the increase has been caused by the response to the pandemic, which has included Economic Impact Payments.
Schied said a capital adjustment in March is likely to increase the equity ratio several points.
Schied and board members indicated that the credit union system is healthy, noting that in 2020, only one credit union failed.
“While we don’t know what the future holds, I believe the [Share Insurance Fund] is well-positioned to handle whatever may come our way as we plan for the worst and hope for the best,” Harper said.
The NCUA is required to adopt a restoration plan if the equity ratio dips below 1.2%.
“Right now, we don’t have enough information to determine if a premium assessment is needed,” Board Member Kyle Hauptman said.
Board Member Rodney Hood agreed. “This does not appear to be a repeat of the economic crisis of 2008,” he said.
At Thursday’s meeting, the NCUA board also approved a final rule governing the use of electronic signatures for insured credit union accounts and received a briefing on the Emergency Capital Investment Program created last year.