NCUA Assesses CUs for Corporate Fund; NCUSIF Equity Ratio at 1.22 Percent

June 17, 2010 — Announced June 17, federally insured credit unions (FICUs) will be assessed 13.4 basis points, or 0.134 of insured shares, in July to pay a portion of the borrowings for the Temporary Corporate Credit Union Stabilization Fund. This assessment equals $1 billion, funds that will be paid to Treasury toward repayment of the temporary fund.

The corporate fund assessment is expected to be one of two assessments for 2010; a premium is also likely for the National Credit Union Share Insurance Fund (NCUSIF) to be assessed in September. NCUA estimates that 552 FICUs out of the 5,224 that had positive net core income for March 31, 2010 may experience negative core income for the year due to this corporate stabilization fund assessment. In the aggregate, credit unions reported a return on assets (ROA) of 0.50 percent for first quarter 2010. This assessment, when annualized, reduces ROA by 11 basis points.

The NCUA expects to mail bills for this assessment in July, with payments due in August.

A report on the NCUSIF was also provided at the meeting. NCUA staff reported that as of May 31, 2010 the NCUSIF equity ratio is 1.22 percent. If the equity ratio goes below 1.20 percent, the agency is required to notify Congress and develop a plan to raise the ratio back to the acceptable level. NCUA staff estimated that a loss of $180-185 million would put the fund under a 1.20 percent equity ratio. Continued growth in insured deposits will also have an impact on the equity ratio. The total number of credit union failures to date for 2010 is 15; three more since last month.

In addition, the NCUA Board approved final rules for federal credit union community chartering policies and technical changes for accounting matters of the corporate stabilization fund.

To view materials from the June NCUA Board meeting, follow this link.