ALEXANDRIA, Va. — The NCUA taketh, and the NCUA giveth back: that's the story of the second quarter financials for credit unions, many of which are reversing millions of dollars in first quarter charges for the corporate credit union bailout which they took at the direction of NCUA, and reporting the gain as operating income.
So, CUs that charged-off millions in the first quarter in expectation of a 1% charge for the corporate bailout were recording lesser figures for the bailout at mid-year, boosting net income, or in many cases, reducing first quarter losses.
California CU lowered its NCUSIF stabilization by more than $1.5 million to $7.7 million, helping it lower losses for the first six months of the year to $17.8 million, from a first quarter loss of $24.5 million. Star One CU reported a $4.5 million net for the first six months, after a first quarter loss of $32.4 million that included a $24.3-million NCUSIF stabilization charge and charges for extinguished shares in WesCorp FCU and Members United Corporate FCU.
'Good Luck Figuring It Out'
"Good luck figuring it out," said Jim Blaine, CEO of North Carolina State Employees CU, of the effects of the NCUA transfer of the $6 billion corporate bailout from the books of the NCUSIF to a new Corporate CU Stabilization Fund.
For some credit unions, like Wings Financial FCU in Minnesota, it meant going from an $8.7-million loss in the first quarter to a $10.4 million net at mid-year. For others, Like Westerra CU in Denver, it meant trimming losses from $6 million for the first quarter to just $2 million loss at mid-year.
Other credit unions that did not account for the corporate bailout in the first quarter are paying for it in the second quarter, this time as an expected 15 basis point premium assessed to capitalize the Corporate CU Stabilization Fund. So troubled Wescom Central CU, which reported a whopping $63.1-million first quarter loss, trimmed those losses to $21.5 million, but a $20 million NCUSIF stabilization charge pushed mid-year red ink to $41.5 million.
And ailing Kinecta FCU, which had a $54.7 million loss for the first quarter, was able to reduce it to a $21.4 million operating loss at mid-year, but a $29.8 million NCUSIF stabilization charge pushed it back up to a $51.3 million loss at mid-year.
The Golden 1 CU will reverse some of the NCUSIF charges but will still have a $44 million charge on its books for the first half reflecting the elimination of its capital in WesCorp FCU, according to Teresa Halleck, president of the $7.5 billion credit union. "We're still going to report a loss (for mid-year)," she said.
Second quarter figures show CUs reporting share (deposit) growth was strong in the second quarter, around 3%, but not as strong as the double-digit growth of the first quarter.
Expect Slow-Down In Second Half
"Share growth was strong in the second quarter, but not as strong as in the first quarter," said CUNA Economist Bill Hampel, who predicted share growth will slow more in the second half, as it does historically. MidFlorida FCU, for example, reported a strong 2.6% growth in shares for the second quarter, but down from 10.3% in the first quarter. That equates to 7.4% growth at mid-year, an additional $106 million of deposits.
Wings Financial FCU reported a 3.5% growth in shares in Q2, compared to 10.4% in Q1 and collected $172 million in new shares in the first six months. New York's Hudson Valley FCU reported an 8.3% growth in shares for the first half, or $183 million in new deposits. Atlanta Postal FCU reported $105 million in new shares for the first six months, up 7.4%.
