July 25, 2012 – Credit unions will be charged a 9.5-basis-point assessment this year for the Temporary Corporate Credit Union Stabilization Fund, within the range of what the agency estimated in June, NCUA announced at its open board meeting Tuesday.
NCUA had estimated an assessment in the range of 8-11 basis points. The assessment is projected to total $790 million. The agency will invoice insured credit unions in September, with payments due in October.
NAFCU has consistently urged the NCUA to assess, if at all, the minimum amount possible and take into full account the impact of any assessment on credit unions.
As a result of this year’s assessment, NCUA is estimating that:
- 335 FICUs will experience negative core income;
- FICUs’ industry-wide ROA will be reduced by an estimated 8 basis points, annualized;
- FICUs’ ROA will decline from 0.89 percent to 0.81 percent after the assessment is paid in full;
- FICUs with less than $10 million in assets will see their aggregate ROA decline from 0.07 percent to -0.01 percent;
- FICUs with $10 million to $100 million in assets will see their ROA fall to 0.36 percent;
- FICUs with $100 million in assets or more will see their ROA fall to 0.88 percent;
- 46 FICUs are expected to see their net worth fall below 7 percent, subjecting them to NCUA’s prompt corrective action earnings retention requirement;
- 15 FICUs are expected to see their net worth drop below 6 percent, requiring them to prepare a net worth restoration plan.
NCUA’s projections are based on March 31 call report numbers. June’s call report numbers have yet to be finalized.
In addition, the NCUA Board will borrow $2.5 billion from Treasury, increasing the outstanding borrowing from $3.2 billion to $5.1 billion. The funds generated from the assessment will be used primarily to pay the principal and interest on maturing term notes, for which payment is scheduled for October and November.
NCUA staff also indicated an estimate of between $1.9 billion and $5.2 billion for the remaining projected assessment, post 2012. The estimated 2013 corporate assessment will be announced this fall, the agency said.