NCUA Legacy Asset Update Suggests Expected Losses Will Be Lower

Posted by Marissa Anema Friday, March 29, 2013 11:03:00 AM

 

ALEXANDRIA, Va. – NCUA Thursday announced it has updated its Web sites showing both realized losses for the Temporary Corporate CU Stabilization Fund through December 2012 and expected remaining assessments.

NCUA’s announcement included a "Questions and Answers" document containing the latest information about costs incurred to date and projected future assessment ranges over the life of the stabilization fund.

The Web site update followed a Wednesday release of the agency's audited financial statements for the stabilization fund.

Total projected assessments declined $900 million at the upper end between July 2012 and December 2012, NCUA said, adding that total future remaining assessments are now projected to range between $1.6 billion and $3.9 billion. In comparison, six months ago the total range was $1.9 billion to $4.8 billion.

On the downside, although not unexpected, the cumulative realized losses and implied write-down’s now amount to $6.1 billion, exceeding the combined capital of the five failed corporates at the time of their conservatorships.

On the plus side, the midpoint of the range of remaining assessments dropped by $600 million, from $3.35 billion to $2.75 billion.

CUNA Chief Economist Bill Hampel noted that with the revised estimates the $2.75 billion midpoint could be fully paid with just over three assessments at last year's rate of 9.5 basis points (bp) of insured shares.  If spread over nine years, the annual assessment would only be about 2.5 basis points.

NCUA’s media advisory is available here.

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