NCUA to Examiners: Consider Alternative Ways to Calculate Net Worth (Misc News: October 25, 2011)
The NCUA is telling its examiners to consider alternative ways to view the sudden influx of deposits in the wake of consumer anger over new bank fees.
According to CUNA News Now, the federal agency said the new funds and members “may temporarily depress a credit union’s net worth ratio.” But the agency added that call reports allow credit unions to use different methods to calculate their net worth ratio such as a rolling average of assets or “point-of-time” assets. The rolling assets approach “was put into place to be more equitable to credit unions (which) may experience a large payroll deposit on the last day of a quarter or have seasonal fluctuations such as teachers’ credit unions.”
But the relief may be only temporary, particularly if the depositors stay for the long term.
"Since this is a rolling average, the longer the deposits stay, the less relief these alternative calculations will provide," the NCUA said.
Credit unions are advised to work with their financial advisors in considering the best option available given their individual financial situation.