WASHINGTON – Credit union executives were cautiously optimistic that NCUA’s latest assessment is smaller than many budgeted for, but are resigned to keeping their checkbooks open for annual – or even semi-annual – payments to the federal regulator as the industry digs out of its deepest hole ever.
“It’s better than we anticipated,” Greg McCellan, president of Max FCU, said yesterday of NCUA’s new 12.4 basis points assessment, as he was registering for NAFCU’s annual Congressional Caucus. But McClellan said he clearly expects his credit union will continue to send funds to Washington, even as the $1.7 million it sent to NCUA this year in the way of a corporate bailout and NCUSIF assessment eats up almost 20% of its net income.
Executives were cheered that the 12.4 bp assessment, and 27 bp for this year (NCUA charged 13.4 bp in July for the corporate bailout), is less than the 40 bp to 45 bp NCUA recommended they budget. But many are worried the charge, the third in 18 months, could erase much of their net income or even threaten the viability of some institutions.
“I’m encouraged by 12.4 basis points, compared to what we had budgeted,” said Glenn Strebe, president of Air Academy FCU. “At the same time, this is just the start.” The $475 million Colorado Springs credit union will be sending almost $800,000 to NCUA, almost 90% of its net income for the first six months of the year.
“In the future we’re going to have more assessments, I think we all know that,” said Bohdan Watral, president of SelfReliance Ukrainian American FCU, in Chicago. “There’s going to be additional natural person credit union failures in the future and more costs for the corporates. We’re going to be paying for this for years.”
“The pain is going to continue for a substantial period of time,” Watral, whose credit union will send some $1.5 million to NCUA this year, told Credit Union Journal Sunday as he was registering for the NAFCU conference.
“Everyone learned two years ago that we’re in this as an industry,” said Rod Taylor, president of Barksdale FCU, which will send more than $1 million to NCUA. “I think we all realized that we have a responsibility to the industry, as well as to the credit union itself.”
John Milazzo, president of Louisiana’s Campus FCU, lamented that the new NCUA charge comes just as his $440 million credit union is digging itself out of a hole that has left it in the red for the past six quarters. “It’s been tough,” said Milazzo, who has seen his core student loan business erased over the past two years and is working to maintain member services, as he prepares to write a $700,000 check to NCUA.
