Conservatorships Require NPCU Financial Statement Adjustments
Credit unions finalizing 2008 annual reports will have to make some 11th-hour adjustments to their year-end financials, thanks to Friday's conservatorship of the $34 billion U.S. Central FCU and the $23 billion WesCorp.
The regulatory action forced the NCUA to revise its total NCUSIF liability to $5.9 billion, from its earlier estimate of $4.7 billion.
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For each individual credit union, it means an additional charge of 10 basis points of earnings and 9 basis points of net worth on average, the NCUA wrote in its official letter to credit unions (09-CU-06).
"If your credit union has already reflected the stabilization expense on the financial statements, the accounts will need to be adjusted for the increase in the NCUSIF's recorded liability estimate. The individual expense for the stabilization action should be calculated based on insured shares of $100,000 in two parts: 1) Multiply insured shares as of December 31, 2008, by 0.30% to arrive at the projected premium expense; 2) Multiply insured shares as of December 31, 2008, by 1% to arrive at the NCUSIF Deposit. Multiply the NCUSIF Deposit by 69% percent to arrive at the revised impairment expense. Previously, this was estimated at 51% of the deposit," NCUA Chairman Michael Fryzel wrote.
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