NCUA Report - April 2012

Board Actions March 2012
WITH FEWER LOSSES, INSURANCE FUND ENDS 2011
IN STRONGER POSITION

The NCUA Board convened its second open meeting of 2012 at the agency’s headquarters March 15, received a quarterly insurance fund report, and unanimously approved NCUA’s Diversity and Inclusion Strategic Plan and technical amendments on NCUA’s rules on fair housing, flood insurance, and agency structure.

in the projected NCUSIF premium range for 2012 down to 0– 6 basis points.

Insurance Fund Shows Steady
Improvements in 2011

Credit unions will experience a reduction in future assessments because NCUA has transferred $278.6 million in equity from the National Credit Union Share Insurance Fund (NCUSIF) to the Temporary Corporate Credit Union Stabilization Fund (Stabilization Fund). Before the transfer, the NCUSIF equity ratio had risen to 1.32 percent. The Federal Credit Union Act requires NCUA to transfer any NCUSIF equity above the normal operating level of 1.30 percent at year-end as long as the Stabilization Fund has outstanding borrowings from the U.S. Treasury.

“The effective management of the NCUSIF is one of our top
priorities,” said NCUA Board Chairman Debbie Matz. “The
NCUSIF’s steady improvements during 2011 demonstrate that
NCUA has been performing this job very well. The equity ratio
rose, the total number and assets of at-risk credit unions fell,
and the NCUSIF portfolio grew. After applying our traditional
methodology, we have also decreased NCUSIF reserves.
Moreover, NCUA will apply the year-end reallocation from the
NCUSIF to lower Corporate Stabilization Fund assessments.”
Other positive, year-over-year trends contained in the 2011
year-end NCUSIF report presented to the Board include:

; Credit union failures dropped by more than 40 percent to 16 failures from 28 failures.

;The total amount of losses associated with credit union failures dropped 75 percent to $55 million from $221 million.

; The total number of CAMEL code 3, 4 and 5 credit unions dropped to 2,150 from 2,192.

; The total assets of CAMEL code 4 and 5 credit unions fell 32 percent to $29.4 billion from $43.3 billion.

; The total assets of CAMEL code 3 credit unions decreased 9 percent to $142.5 billion from $156.7 billion.

Finally, the Chief Financial Officer reported on the Stabilization Fund’s operations based on preliminary and unaudited information. The condition of the Stabilization Fund remained stable in 2011. During 2011, the Total Net Position of the Stabilization Fund improved by $2.2 billion. The Stabilization Fund continues to have $3.5 billion in outstanding borrowings with the U.S. Treasury.

The NCUSIF ended 2011 with an equity ratio of 1.30 percent after the year-end transfer from the NCUSIF to the Stabilization Fund. This equity ratio is calculated on an insured share base of $795.3 billion. At year-end 2010, the NCUSIF equity ratio stood at 1.28 percent on an insured share base of $757.9 billion. The growth in credit union insured shares for 2011 was nearly 5 percent. The value of the NCUSIF portfolio grew about 4 percent during 2011 to close the year with a value of $10.7 billion.

On the strength of these positive trends and other factors, NCUA’s robust reserving methodology allowed for a reduction in the NCUSIF’s reserves by 51 percent to $606.6 million at year-end 2011 from $1.2 billion at year-end 2010.

In light of the steady improvements, NCUA did not collect an NCUSIF premium in 2011. At the open Board meeting in November 2011, Chairman Matz also announced a reduction

Strategic Plan Advances NCUA Workforce
and Supplier Diversity

NCUA’s newly adopted Diversity and Inclusion Strategic Plan for 2012–2016 complies both with President Obama’s Executive Order 13583, which aims to promote diversity and inclusion throughout the federal government workforce, as well as the supplier diversity requirements established by section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

“In response to the Dodd-Frank Act, we opened the Office of Minority and Women Inclusion a little over a year ago, and now we have delivered a strategic plan that will further boost our efforts to build and sustain a diverse workforce,” said Chairman Matz. “The plan brings into sharper focus our ongoing efforts to advance equal opportunity, diversity, and inclusion within NCUA.”