When the NCUA announces the NCUSIF assessment to cover losses at natural person credit unions in September, it will probably be between six and 10 basis points of insured shares, according to CUNA Chief Economist Bill Hampel.
CUNA based its prediction on several recent developments, including a negative ROA during the fourth quarter of 2009, though that improved during the first quarter of 2010. However, the NCUA's decision to place the $800 million Arrowhead Credit Union into conservatorship and the closing of the $200 million St. Paul Croatian FCU have also put strains on the NCUSIF.
The analysis sets up three possible scenarios. A "base case,'' in which credit union losses are $1.2 billion; an "optimistic case,'' which would be based on losses of $700 billion; and a "pessimistic case,'' in which losses totaled $2.2 billion. The NCUSIF has already expensed $1.1 billion for insurance losses. If the last scenario occurred, the NCUA would have to levy a premium of 15 basis points next year.
The assessment to cover losses at natural person credit unions will be in addition to the 13.4 basis points of insured shares assessment that the agency announced last month to pay back this year's portion of the loan from the Treasury Department which financed the Temporary Corporate Credit Union Stabilization Fund.
When the board announced that decision, Board Member Michael Fryzel said that after the board approves the assessment for the insurance fund the final total will be between 15 and 40 basis points as the agency had originally estimated. He recommended that credit unions budget toward the higher end of that range.