NCUA Delivers $2 Billion Bill for the Corporates
ALEXANDRIA, Va. — NCUA said this afternoon a $2 billion, or 25 basis points, charge to paythis year's corporate credit union assessments will drive as many as 1,648 credit unions into the red for the third quarter and an estimated 811 into negative territory for the year.
This year's assessment, which must be paid by Sept. 27 and be expensed for the third quarter, will be repiorted on third quarter Call Reports.
NCUA has assessed federally insured credit unions a total of $3.3 billion for the corporate resolution so far, including charges totaling $1.3 billion in 2009 and 2010. NCUA projects it will need to ask credit unions for another $700 million, or nine bps, next year for the corporate assessment.
NCUA did have some good news, projecting lower costs for the final corporate tab, between $5.2 billion and $9.5 billion, that's on top of some $6.5 billion in credit union capital already erased by the corporate meltdown.
Larry Fazio, deputy executive director for NCUA, said while the total projected is down somewhat, the range of estimates is broader than before. "The range has increased as a result of the record volatility in the economy we've seen recently," he said.
The new loss projections were provided to NCUA by Wall Street firm Blackrock, which has been hired to provide quarterly loss estimates.
This year's assessment will reduce the industry's average return-on-assets, or ROA, from 86 bps at mid-year, by about 21 bps.