Share Insurance Fund Continues Strong Positive Trends

The NCUA Board at its February meeting approved a final rule giving federally insured credit unions greater flexibility and autonomy to offer member business loans in a safe and sound manner (see article on page 1).

The Chief Financial Officer also briefed the Board on the performance of the National Credit Union Share Insurance Fund, which had a net income of $61.3 million for 2015.

The Share Insurance Fund ended 2015 in a strong position due to continued improvement in the performance of federally insured credit unions, a strengthening economy and a decline in insurance and guarantee program liabilities.

The Share Insurance Fund ended 2015 with a 1.26 percent equity ratio. NCUA calculated the ratio on an insured share base of $961.3 billion, a 6.5 percent increase from the previous year's insured base of $903 billion. When the Share Insurance Fund bills for the one percent capital deposit adjustment in March, the equity ratio is projected to increase to 1.29 percent.

The net position of the Share Insurance Fund was $12.2 billion at the end of 2015.

"The staff overseeing the Share Insurance Fund has an important responsibility, and the fund's solid financial performance, backed by seven consecutive clean audits, clearly demonstrates how well they assume that responsibility," Matz said. "NCUA's first priority is to protect the fund and the deposits of more than 102 million credit union member accounts, and we take that job very seriously."

Backed by the full faith and credit of the United States, the Share Insurance Fund insures member accounts up to $250,000. No member of a federally insured credit union has ever lost a penny of shares insured by NCUA.

Overall, the amount of assets in CAMEL codes 3, 4 and 5 credit unions has decreased 52.2 percent since peaking at $205.6 billion in September 2010. The continuation of these positive trends and other factors contributed to a net decrease of $13.4 million, or 7.5 percent, in the Share Insurance Fund's reserve for insurance losses during 2015.

Year over year, the Chief Financial Officer reported:

  • The number of CAMEL codes 4 and 5 credit unions fell 20.3 percent to 220 at the end of 2015, down from 276 at the end of 2014.
  • Assets in CAMEL codes 4 and 5 credit unions fell 25.2 percent to $8.6 billion at the end of 2015, down from $11.5 billion at the end of 2014.
  • The number of CAMEL code 3 credit unions declined 10.6 percent to 1,261 at the end of 2015, down from 1,411 at the end of 2014.
  • Assets in CAMEL code 3 credit unions declined 6.0 percent to $89.7 billion at the end of 2015, down from $95.4 billion at the end of 2014.

There were 16 involuntary liquidations and assisted mergers during 2015, compared to 15 credit union failures in 2014. The total amount of losses associated with failures in 2015 was $14.8 million, a decrease of 63.4 percent from $40.4 million the previous year. Fraud was a contributing factor in 11 of these failures, at a cost of $12.3 million during 2015, compared to 7 of 15 failures in 2014 at a cost of $36.5 million.

The Chief Financial Officer also reported the Share Insurance Fund and the agency's three other permanent funds—the Operating Fund, the Central Liquidity Facility and the Community Development Revolving Loan Fund—each received an unmodified, or "clean," audit opinion with no reportable conditions for 2015 from the agency's independent auditor, KPMG LLP. The audits are posted online and incorporated into NCUA's 2015 Annual Report.

Because of the positive performance, NCUA did not assess a Share Insurance Fund premium in 2015. At the Board's open meeting in November 2015, the Board received a briefing on the proposed premium range for 2016. Staff recommended a range of zero to six basis points.