CUs Fear NCUSIF Premium Impact

Credit unions fear that the NCUA’s decision to levy premium to shore up the NCUSIF will result in an already difficult year becoming even worse.That’s the findings of a survey that NAFCU took for its March Flash Report.NCUA’s decision to levy a premium has caused 70% of credit unions surveyed by NAFCU to adjust their growth predictions downward.According to the report, 97.7% of those surveyed said their predictions for net income growth had been affected by the premium announcement, and 2.3% said their prediction on asset growth was affected.The NCUA plan to stabilize corporate credit unions, which was approved two days after U.S. Central announced it was expecting a $1.1 billion loss for 2008, involved a $1 billion capital injection into U.S. Central and a guarantee of all deposits by natural person credit unions in corporate credit unions.The agency has projected that the average cost to credit unions will be a 62-basis-point return on assets and a 56-basis-point return on net worth ratio.NAFCU’s survey found that 80.6% of respondents were expecting a decline in net income growth this year, 14.9% were expecting an increase and 4.5% expect no change.On asset growth, 34.3% expected an increase, 34.3% expected no change and 31.3% expected a decline.A plurality of respondents expected a decline in loan growth this year.The NAFCU survey found that credit unions were most likely to talk to members about the premium assessment via letter (34.3%). Other methods of communication cited included a pamphlet (20.9%), e-mail (19.4%), personal visit (11.9 %) and phone call (11.9%).The projections of tough times ahead come in the wake of mixed results in the last few months, for the credit unions surveyed.Share growth increased 1.8% in January, up from 0.5% in December. NAFCU projects overall share growth for 2009 will be 6%, compared with 7.7% last year.Among survey respondents, first-mortgage lending grew 0.08% in January, compared with 0.4% in December.Month-to-month new vehicle lending decreased by 0.03% and used-vehicle lending increased by 0.04% in January, according to the Flash Report.–[email protected]