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NAFCU Chief Economist and Vice President of Research Curt Long Tuesday urged the NCUA to reset the National Credit Union Share Insurance Fund's (NCUSIF) normal operating level (NOL) to the historical level of 1.3 percent so that credit unions may realize the fullest distribution.

The NCUA Board received an update on the NCUSIF quarterly report during its November meeting. According to the agency, the fund posted a net income of $24 million in the third quarter of 2019, with gains attributed to strong investment income earnings.

"While a distribution from the SIF in 2019 will depend on the performance of the fund over the second half of the year, as well as the NCUA Board's discretionary selection of the NOL, conditions for the fund have improved," wrote Long in a letter to the agency. "Insurance losses during the year have been minimal, and agency staff recently announced that it would begin to reverse the shortening of the investment portfolio duration which began in 2017, thus providing the opportunity for greater yield in the future."

In the letter, Long discussed the future of the NOL and the agency's current five-year forecast. He also reiterated NAFCU's support of a strong NCUSIF and a NOL "which provides adequate protection to taxpayers and minimizes the potential for premium charges to credit unions."

"NAFCU also believes that the SIF should be managed proactively with a goal of identifying and quantifying salient risks," he added. "However, those goals must be balanced with the understanding that credit union resources are scarce."

In May, more than 5,5000 credit unions received $160.1 million in equity distributions from the NCUSIF. This followed the agency's reporting of an equity ratio of 1.39 percent at the end of 2018, which was above the board-approved NOL of 1.38 percent.