ALEXANDRIA, Va. – NCUA said yesterday the $3.2 billion of losses reported by credit unions was almost all related to costs associated with the corporate credit union bailout.
The day before, NCUA announced that credit unions had a negative-return-on assets of 1.51% for the first three months of the year, the worst quarter ever for credit unions. But after subtracting the corporate stabilization costs that many, but not all credit unions, reported for the first quarter, the loss was much smaller, just $22 million. That equates to an ROA of 0.01%–matching the fourth quarter of 2008 as the worst ever.
And if the charges some members of WesCorp FCU took in the first quarter for the extinguishment of their WesCorp capital were also subtracted, the industry’s red ink would be erased altogether and credit unions would have reported a slight net for the first quarter.
The recently passed Corporate CU Stabilization bill will allow credit unions to reclaim most of the bailout charges taken last quarter and spread it out over several years now, according to Bill Hampel, chief economist for CUNA.
"Credit unions are likely to end up paying somewhere in the neighborhood of ten-to-15 basis points this year for the NCUSIF stabilization effort and related costs," Hampel told The Credit Union Journal yesterday.
