NCUA Equity Distribution Rule (12 CFR 741)

Last September, the National Credit Union Administration (NCUA) Board voted to close the Temporary Corporate Credit Union Stabilization Fund (TCCUSF) prior to its expiration in 2021. With its closure, the Fund’s assets were transferred to the Share Insurance Fund (NCUSIF). At that same meeting, the Board also approved setting the NCUSIF’s normal operating level at a 1.39% equity ratio.

The equity ratio currently exceeds the normal operating level and stands at 1.46%, due in part to the transfer of the TCCUSF. By law, the NCUA is required to reduce its equity ratio to an appropriate level in years the equity of the NCUSIF exceeds normal operating levels. The NCUA had several options it could use to equalize the overage with credit unions. On February 15, 2018, the Board voted unanimously to declare a distribution in the form of a dividend totaling $735.7 million for the year ending December 31, 2017.  The dividend is estimated to be paid in the third quarter of 2018.

Bottom line: Because of the excess amount in the Share Insurance Fund from the closure of the Stabilization Fund, eligible credit unions will receive a pro rata share of $735.7 million. Had the Stabilization Fund not been closed and its assets transferred, credit unions were looking at a premium assessment of $1.3 billion.

Receiving and Recording the Distribution

Under the final rule, all eligible credit unions will receive a distribution. Eligibility is determined by the credit union having had filed a quarterly Call Report as a federally insured credit union for at least one reporting period in calendar year 2017. The NCUA’s final rule adopted a pro rata share methodology using an eligible credit union’s quarterly average insured share balance as reported over the calendar year in four quarterly Call Reports, referred to as the four-quarter average approach.

The final rule became effective March 25, 2018. Thus, credit unions may recognize its pro rata share of the Share Insurance Fund equity distribution as of that date.

Calculating the Distribution

Earlier this week, NCUA issued guidance for calculating an estimate of the Share Insurance Fund equity distribution. A credit union can estimate its pro rata share by calculating its average amount of insured shares, as reported on their Call Reports filed from March 31, 2009 to December 31, 2017, and multiplying the result by NCUA’s preliminary pro rata factor of .00085897013052.



Avg. Insured Shares (36 qtr. period) x .00085897013052 = Estimated Equity Distribution


Accounting Entry:

Debit:   Accounts Receivable

$ xx.xx

Credit: Other Operating Income

  $ xx.xx





The final rule can be found at (12 CFR 741):

FAQs with further guidance on recording the accounting entry:

If you have any questions, please feel free to call either Steve Lillie or Mike Jones at 866.965.2294.