NCUA Report - July 2012

JULY 2012

NUMBER 7

WWW.NCUA.GOV

HIGHLIGHTS

2 Chairman’s Corner Ten Things You May Not Know about NCUA

Office of the Chief Financial Officer Report
STABILIZATION FUND EARNS CLEAN 2011 AUDIT
Websites on Corporate System Resolution Costs
and NGN Program Also Updated

4 Board Perspectives Reputation Repair One Size Fits All— Not Anymore

5 Region IV Report Assumptions Affect Interest Rate Risk Calculations

7 Office of Consumer
Protection Report
Mortgage Servicing
Practices and Military
Homeowners

8 Office of Small Credit
Union Initiatives Report
OSCUI Begins New
Selection Process
for Credit Unions to
Receive Consulting
Services

On June 21, 2012, NCUA’s independent financial auditor, KPMG LLP, issued an unqualified, or clean, opinion on the Temporary Corporate Credit Union Stabilization Fund (Stabilization Fund) 2011 financial statements.

“Once again, NCUA has received a clean audit opinion for the Stabilization Fund from our independent auditor,” said NCUA Board Chairman Debbie Matz. “As a regulator of financial institutions, NCUA is committed to producing financial reports of the highest quality year after year for each of our funds. KPMG’s determination that we achieved this standard for the Stabilization Fund in 2011 is, therefore, very welcome news.” The Stabilization Fund provides NCUA with the flexibility needed to manage the effect of the costs to the credit union system associated with the losses on troubled mortgage-backed securities purchased by the five failed corporate credit unions. NCUA liquidated these five failed credit unions in 2009 and 2010.

The Stabilization Fund’s Net Position improved by $2.2 billion, from a deficit of $7.5 billion at year-end 2010 to a deficit of

$5.3 billion at year-end 2011. The change is a reflection of the Stabilization Fund’s activities for 2011. As allowed by Congress, the Stabilization Fund can operate in a negative position.

During 2011, the most significant items related to income were the nearly $2 billion in premium assessments collected from insured credit unions and the $279 million distribution from the Share Insurance Fund. The most significant expense was the $111 million increase in the overall provision for losses. This amount can be seen on the Statement of Net Cost in the Insurance and Guarantee Loss Expense line item. When combined, these three items account for the $2.2 billion change in the Stabilization Fund’s Net Position.

The changes between the year-end 2010 and 2011 balance sheets can be summarized as follows. A significant change in assets was the establishment of a $627 million receivable from the asset management estates operated by NCUA's Asset Management and Assistance Center. This amount represents the Stabilization Fund’s expected reimbursement from the asset management estates for claims paid by the Stabilization Fund.