National Credit Union Administration examiners will consider the impact the Corporate Stabilization Program has on balance sheets, according to Supervisory Letter 09-01, issued today.

The letter instructs examination staff to differentiate between the impact of recent NCUA Board actions and operational activities by credit union management when evaluating credit union performance and risk profile. The letter also sets forth guidance allowing for examiner recognition of possible temporary reductions in return on assets resulting from credit union participation in the Credit Union System Investment Program (CU SIP).

"This Supervisory Letter is part of overall NCUA efforts to recognize and mitigate the impact of the Corporate Stabilization Program on credit union earnings and net worth. The letter makes clear and appropriate distinctions between NCUA Board actions related to the corporates and decisions made by an individual credit union," said NCUA Chairman Michael E. Fryzel.

Additionally, the letter stated "it is essential credit union management and examiners maintain an open and ongoing dialogue on the strategic direction of the credit union in relation to earnings and net worth and not be overly focused on the financial impact of the actions taken by the NCUA Board."