2012 corporate credit union assessment will be 9.5 bp
07/25/2012 09:10 am
During the July 24 NCUA open board meeting, the 2012 Temporary Corporate Credit Union Stabilization Fund (TCCUSF) assessment was set at 9.5 basis points (bp). The assessment is based on insured shares as of June 30. "The assessment is just about what we expected, falling right in the middle of the forecasted eight to 11 bp range," CUNA President/CEO Bill Cheney said. 'The good news - to the extent there is some for credit unions - is that this year's assessment is much smaller than last year's 25 bp charge."
Invoices for the assessment will be mailed to credit unions in September, and payment will be due by Oct. 9, the NCUA announced. Credit unions should record the TCCUSF assessment as an expense on their August financial reports. The TCCUSF assessment is expected to bring in $790.5 million in funds to help cover the costs of corporate credit union stabilization.
"The primary determinant of the size of this year's assessment is the cash flow needs of the stabilization fund, rather than any change in expected losses over the life of the fund," CUNA Chief Economist Bill Hampel said. The NCUA said the funds generated by the assessment, combined with borrowed U.S. Treasury funds, will pay $2.66 billion in net obligations that are due in 2012. The obligations are mainly principal and interest on maturing medium term notes issued by corporate credit unions and guaranteed by the TCCUSF, the agency added.
Federally insured credit unions will have paid $4.1 billion in corporate resolution expenses once this round of assessments has been collected, according to the NCUA. Credit unions can expect between $1.9 billion and $5.2 billion in remaining assessments, and this total would be paid off between 2013 and 2021, the agency said. Assuming the $3.6 billion mid-point of NCUA's published remaining assessment range, Hampel said credit unions would pay off the remaining costs in about four years at assessment rates similar to this year's. Three years of ten bp assessments, and an eight bp assessment in the fourth year, would cover the remaining corporate stabilization costs, he added.