ALEXANDRIA, Va. (6/18/10)--Credit unions will soon be charged an assessment of 0.134% of insured shares as the National Credit Union Administration (NCUA) collects a portion of the funds necessary to pay for the costs of the corporate stabilization. Invoices for the assessment will go to credit unions in July with the assessment due in August. In accordance with the stabilization fund established by Congress last year, the agency may collect the funds necessary to cover the costs of corporate stabilization over a period of as long as seven years. The NCUA assessment of the likely amount of those costs is in the neighborhood of $6 billion, but the actual amount of the losses will not be known for some time, Credit Union National Association (CUNA) Chief Economist Bill Hampel said. This year’s assessment will provide $1 billion toward the eventual losses, he added. Credit unions should expense their assessment in June and report the expense on their June 2010 call reports, according to NCUA. CUNA President/CEO Dan Mica said that while the NCUA’s assessment is close to CUNA’s prior predictions, it “is still a burden on the nation’s credit unions coping with a recovering economy. “Given that, and looking forward, we are hopeful that the agency will take the necessary actions to keep future assessments to cover corporate credit unions costs and for the National Credit Union Share Insurance Fund (NCUSIF) at the lowest level possible,” Mica added. NCUA Chairman Debbie Matz said that the agency would discuss a separate assessment to replenish the NCUSIF later this year. Hampel predicted that the pending NCUSIF assessment would be somewhere between 5 and 10 basis points (bp), bringing the total amount assessed by the NCUA this year to between 18 and 23 bp. In it’s monthly report on the status of the NCUSIF, which was delivered later in the NCUA's monthly board meeting, the NCUA staff noted that the fund’s equity ratio was at 1.22% as of the end of May 2010, adding that the fund increased it’s reserves for both specific and non-specific natural-person credit union (NPCU) losses by $132 million, bringing the total amount of its reserves to $1.1 billion. The NCUA’s $1.1 billion “provision” for natural person credit union insurance losses “is not this year's expense,” but is “what the NCUSIF has expensed over the past couple of years in anticipation of future losses,” Hampel added. “The language NCUSIF uses can be confusing compared to credit union terminology. The ‘Provision for CU Losses’ is analogous to a credit union’s allowance for loan losses, and the NCUSIF’s ‘Insurance Loss Expense’ is similar to a credit union’s loan loss provision,” Hampel said. Overall, insurance loss expenses are “running at budget” this year, and “expenses for the rest of the year will likely depend primarily on changes in the number and size of troubled credit unions,” Hampel added.