Credit unions across the country can expect a little extra dosh next week.

On July 23, 2018, the National Credit Union Administration will dole out $735.7 million for more than 5,700 federally insured credit unions as part of a special distribution from the National Credit Union Share Insurance Fund, the agency announced today.

The funds – technically an equity distribution – are the result of NCUA merging the Temporary Corporate Stabilization Fund into the NCUSIF after the regulator raised the equity ratio to 1.39 percent earlier this year in order to forestall a $1.3 billion premium charge.

Credit unions receiving a payout will be mailed statements this week indicating the amount they will receive, NCUA said. Any CU that filed a quarterly call report as a federally insured institution for at least one reporting period during 2017 is eligible for a pro rata distribution.

As Credit Union Journal has reported, NCUA finalized the rule determining payouts at its February 2018 board meeting. The regulator’s move to merge the stabilization fund and share insurance fund got mixed reviews, with some trade associations supporting it and others against it, and overall received a significant amount of pushback from credit unions. Not all CUs will receive a payout as a result of the equity distribution, and some – including NCUA Chairman Mark McWatters – have lamented that some CUs which paid a significant amount to help resolve the corporate credit union crisis at the end of the last decade will not receive a payout, since they subsequently converted to private share insurance. A total of 5,508 payees are set to receive funds, representing the more than 5,700 natural person and corporate credit unions that paid into the stabilization fund. The numerical difference is the result of mergers and other consolidation across the credit union movement.

Still, McWatters in a statement praised the agency’s work in finding a way to return credit union funds ahead of schedule. Payouts were not originally slated to take place until 2021, however because NCUA saw more than $3.8 billion in legal recoveries – at a cost of more than $1 billion in attorneys’ fees – the timeline was moved up.

“The NCUA’s prudent management of the corporate resolution process provided the ability to close the Stabilization Fund four years early,” McWatters said in a statement. “Through a collaborative, bipartisan process among the board members and a great deal of diligent work by staff, the NCUA has been able to avoid a premium assessment and safely distribute funds to credit unions that can be put to work building local communities, creating new businesses, and improving the lives of members across the country while advancing the objectives of protecting member deposits and maintaining a safe and sound credit union system.”

Board member and former chairman Rick Metsger noted that the payout will be the largest share insurance distribution in NCUA history, “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.”

While the major national credit union trade associations had differing opinions on NCUA's strategy for returning the monies, the Credit Union National Association praised the regulator in the run-up to distributing the funds.

"We commend the NCUA board for making the decision to start issuing refunds and see this as a victory for credit unions," CUNA President/CEO Jim Nussle said in a statement. "CUNA was the only national trade association advocating for refunds to begin in 2018, and more than 90 percent of credit unions who commented on NCUA’s proposal supported our position. Credit unions look forward to getting their money back and putting it to work for their members."

For its part, the National Association of Federally-Insured Credit Unions continues to insist CUs should be made whole for the money they paid into the stabilization fund, though in an email to Credit Union Journal a NAFCU representative praised NCUA for beginning the process of returning credit unions' assessments.

"We are pleased that credit unions will be receiving their dividend from the merger of the funds but will continue to push for more monies to be returned to credit unions," said Carrie Hunt, NAFCU's EVP of government affairs and general counsel.

More information on the distribution, including NCUA’s methodology for determining each institution’s payout, 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.

Updated July 17, 2018 at 3:59PM: This story has been updated with further comments and specifics on the number of institutions that can expect a payout.