CUs Shrink to Handle NCUA Asssement Posted by AVCU on 3:04 PM

The 6/28 edition of American Banker cites a growing number of credit unions choosing to cope with NCUA's recent (and future) assessments by reducing asset size instead of growing, in order to maintain critical net worth ratios. For most, that means lowering rates in order to discourage new deposits or encourage marginally profitable depositors to withdraw funds.Last week's announcement by NCUA of a $1.1 billion corporate-related assessment will reduce the average credit union's net worth by about 13bp and may push over 1,000 credit unions into the red for the 2nd quarter (timing required to accrue the expense). The action will push up to 552 credit unions into the red for the year.

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