ALEXANDRIA, Va. - Credit unions will be receiving new guidance in the near future regarding what NCUA considers appropriate levels of return on assets (ROA), according to the agency.
During a web seminar hosted by CUNA last week, Dave Marquis, director of NCUA’s Office of Examination and Insurance, said additional guidance on ROA is being prepared at the same time many credit unions are struggling to show robust and solid ROA numbers.
During the web seminar Marquis said NCUA recognizes that credit unions need ROA relief, but also emphasized that CUs must demonstrate they are practicing responsible management of their balance sheets and careful strategic planning.
As Credit Union Journal first reported in 2006, NCUA published a letter clarifying that the agency would not be holding credit unions to the long-established, minimum ROA target of 1%. Instead, NCUA said it was directing its field examiners to take into account an individual credit unions’ earnings relative to net worth needs.
In subsequent interviews, agency officials have reiterated their position on the 1% ROA target not being fixed.
In his most recent comments, Marquis said that were the agency to update today the letter it might even set lower levels of ROA expectations than it did in 2006.
At press time, NCUA declined further comment as to when it would take any action or what that action could entail.
