Members have been contacting Members United, asking for guidance on accounting for depletion entries. In a media release issued on September 11, NCUA said credit unions will “...need to consider the capital depletion as they make impairment judgments related to their financial reports. Credit unions are encouraged to contact their licensed, independent accountants for guidance in applying generally accepted accounting principles to these facts and circumstances.” 

Members United also recommends that members discuss depletion entries with their independent accountants. While the most common treatment may simply be to record expense when depletion entries are recorded against the capital accounts (which is what Members United has done to date with its capital accounts at U.S. Central), a less common treatment required by some practitioners has been to impair 100% of capital balances.

Members United is following NCUA guidance as outlined in Rules and Regulations 704.2 and Letters to Credit Unions No. 09-CU-10 regarding depletion of capital from the impact of U.S. Central and our own investment other-than-temporary impairment (OTTI).