Stabilization Fund Assessment Is 25 Basis Points

The NCUA Board approved a 2011 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment of 25 basis points of insured shares (deposits) -- at the top of the range estimated last November by the agency. NCUA estimates the assessment will raise $1.956 billion.

The assessment is based upon June 30, 2011 insured shares and is due by September 27.

NCUA acknowledged during the Board meeting that it tapped its $6 billion line of credit from Treasury -- borrowing $3.5 billion in July.

According to analysis by NCUA staff, the 25 basis point assessment will reduce annualized return on assets for credit unions by 21 basis points. NCUA estimates that 811 credit unions that had reported a profit may now experience negative net income for the year with the impact falling disproportionately on smaller credit unions.

Additionally, the assessment will cause 81 credit unions to slip from being well capitalized. Twenty-four credit unions will become undercapitalized and 3 credit unions will become critically undercapitalized with a net worth ratio under 2 percent.

NCUA, also, reported that 2012 assessments for the TCCUSF will be 9 basis points based upon June 2011 insured shares. This will raise approximately $700 million.

NCUA revealed that projected assessments over the remaining life of the TCCUSF are between $1.9 billion and $6.2 billion, based upon projections from Blackrock's model. Credit unions prior to this assessment had already made payments of $1.3 billion to cover TCCUSF expenses.

Furthermore, NCUA does not anticipate a National Credit Union Share Insurance Fund (NCUSIF) premium assessment for this year; but given the more uncertain economic outlook for 2012, NCUA stated that NCUSIF premiums could range from zero to 7 basis points next year.

Read the Board Action memo.