ALEXANDRIA, Va. – Last month’s $1.1 million NCUA assessment, coming after last year’s $1.4 billion charge, is foiling a recovery for many credit unions, deepening losses for some and turning net income into losses many others.
“If you’re near the edge it could be pushing you over and if you’re in good shape it’s going to be holding you back,” said Marvin Umholtz, a long-time league executive now an industry consultant.
The first-half assessment means that some credit unions that are digging out from their troubles are taking a step back. And many more that are staging turnarounds are being weighed down.
A $1.2 million charge for the NCUA assessment erased a $450,000 first quarter net for California CU, digging out from last year’s $30 million loss, and turned it into a $670,000 loss for the first six months of 2010. At Commonwealth Central CU in San Jose, a $360,000 NCUA charge erased a $412,000 first quarter net and created a $262,000 loss for the first half.
“This year’s NCUA charge is expected to be followed with another assessment in the fall, and at least one a year for the next seven or eight, or even 10 years, noted Umholtz, referring to NCUA’s plans to pay for the corporate credit union bailout.
Other credit unions around the country are reporting similar effects. A $1.8 million charge for the NCUA assessment erased most of a $2.4 million second quarter net for Florida’s Fairwinds CU and created a $2.3 million mid-year loss. A $556,000 NCUA charge at Insight Financial CU erased a $336,000 second quarter net. Power Financial CU set aside $594,000 for the NCUA charge in the first half, eliminating a marginal $222,000 net and creating a $373,000 first half loss.
At Texans CU, a $2 million NCUA assessment pushed mid-year losses from $7.5 million to $9.6 million. At Municipal CU, a $1.9 million charge wiped out a marginal second quarter net of $317,000, pushing the New York credit union giant into the red to the tune of $1.4 million for the first half of the year. Another large New York credit union, USAlliance FCU, reported that $900,000 set aside for the NCUA erased all $835,000 of its second quarter income and most of its first quarter net, leaving it with a meager $536 net for the first six months of 2010.
While some credit unions began accruing for this year’s NCUA charge in the first quarter, most chose to wait until the assessment was formalized by NCUA, which required them to accrue the charge in the second quarter.
