Strong NCUSIF, TCCUSF Performance Decrease Premium Chances
The number of federal credit unions with CAMEL codes 3, 4 and 5 dropped significantly during 2012, according to the NCUA. The declining number of lower-rated credit unions, of course, reduces the exposure of the NCUSIF to potential losses.
The agency reported the NCUSIF ended 2012 with a 1.30% equity ratio, after transferring $88 million in "excess equity" to the Temporary Corporate Stabilization Fund. The NCUA said it calculated the ratio on an insured share base of $839.4 billion, compared to $795.3 billion at the end of 2011, indicating growth of 5.5%.
Also today, the NCUA reported good 2012 results for the TCCUSF. Based on "preliminary and unaudited" information, for 2012 the total net position of the fund improved nearly $1.8 billion.
The agency staff noted that when the stabilization fund has outstanding borrowings from the U.S. Treasury, the Federal Credit Union Act requires the NCUA to make a distribution from the NCUSIF if the share insurance fund has an equity ratio above the normal operating level of 1.30% at year's end.
"Had the stabilization fund not existed, the $88 million would have been paid as a dividend to credit unions on their NCUSIF deposits. Instead, it will serve to lower future assessments," Credit Union National Association Chief Economist Bill Hampel points out.
Of the improved CAMEL ratings, NCUA Chairman Debbie Matz said, "Protecting the Share Insurance Fund is a top priority for NCUA, and the 2012 year-end results show that NCUA's prudent management and effective regulatory policies are working well."
At today's meeting the NCUA's chief financial officer also related that:
The total number of CAMEL code 3, 4 and 5 credit unions dropped 9.8%, to 1,940 at year-end 2012 from 2,150 in 2011;
Assets of CAMEL code 3 credit unions decreased to $119.3 billion at the end of the fourth quarter of 2012, a 16.3% drop from $142.5 billion on Dec. 31, 2011; and
For lowest ranked CAMEL code 4 and 5 credit unions, assets fell 35.4%, to $19 billion at the end of 2012, down from $29.4 billion for 2011.
As a result of the improving condition of stressed credit unions, the percent of total insured shares in CAMEL 4 and 5 credit unions declined from 3.3% to 2.0% during 2012. At the same time, shares in CAMEL 3 credit unions have fallen from 15.9% to 12.6% of insured shares. Therefore, shares in CAMEL 3, 4 and 5 credit unions are down from 19.2% of insured shares as of December 2011, to 14.6% as of December 2012.
Overall, the amount of assets in CAMEL Code 3, 4 and 5 credit unions have decreased 32.7% since reaching a high in September 2010.
There was no NCUSIF premium assessed in 2012 and the agency has projected a premium range between zero and 5 basis points for 2013.