ALEXANDRIA, Va. (7/30/12)—The National Credit Union Administration (NCUA) is distributing a Letter to Credit Union (12-CU-09) to answer what it calls key questions about its July 24 action setting an assessment for the Temporary Corporate Credit Union Stabilization Fund of 9.5 basis points (bp) of a credit union's insured shares as of June 30, 2012.
Each credit union will receive an invoice in September for the 2012 assessment, the NCUA letter says, adding that payment will be due on Oct. 9.
The NCUA currently estimates the remaining costs of the corporate stabilization effort, after this year's assessment, to be in the range of $1.9 billion to $5.2 billion. Using the midpoint of that range, Credit Union National Association Chief Economist Bill Hampel estimates it would take four more years of assessments similar to this year's rate to complete payments.
Alternatively, with lower annual assessments, of 5 bp for example, the $3.6 billion would be paid off in seven years. Hampel added that the actual future costs will depend on the pace of recovery of the economy in general and the housing market in particular.
The NCUA letter explains that the funds generated by the 9.5 bp assessment this year, along with borrowed funds from the U. S. Treasury, will be used to pay fund obligations coming due through the end of this year.
The primary remaining obligation among these, the agency notes in the letter, is $3.5 billion of medium-term notes issued by corporate credit unions and guaranteed by the stabilization fund.
The NCUA projects that, based on March 31 Call Report data when credit unions reported a "relatively strong" return on average assets (ROA) of 0.89%, the assessment likely will reduce ROA for 2012 by eight bp and the aggregate net worth ratio by five bp.
The letter says a credit union should record the assessment expense on the September 2012 Call Report using the Temporary Corporate CU Stabilization Fund Assessment line (account code 311) on the Statement of Income and Expense. It tells credit unions to consult with accounting practitioners for further guidance in recording the assessment.
The Letter to Credit Unions also addresses examinations as they relate to the corporate assessment, and remaining projected assessments. (Use the resource link to read the complete letter>)
The NCUA says that credit unions with questions related to the calculations and projections should contact its Office of Examination and Insurance at 703-518-6360 or email@example.com
. For questions related to the assessment invoice and payments, they can email firstname.lastname@example.org
Credit unions can also access additional information on the NCUA's website (link below) by clicking on the tab "Credit Union Resources and Information" and selecting "Corporate System Resolution Costs" or "NGN Program Information" from the menu. These websites are updated semi-annually.