NCUA Vice Chairman Kyle S. Hauptman Statement on the Board Briefing, Share Insurance Fund Quarterly Report

As Prepared for Delivery on February 15, 2024

Congratulations on another clean year-end audit.

While the Fed appears to be done hiking interest rates, and in fact the market currently estimates 100 bps of rate cuts by year-end, credit unions are still dealing with balance damage due to the last couple years of rate hikes.

However, I want to stress that credit unions have performed well and remained resilient. In 2023 there were only three credit union failures, totaling just $1.4 million in Share Insurance Fund losses. Of course, we’re all also aware that the insurance business, by nature, is about unpredictable events. Share insurance, like any insurance, is there for the chaotic times that often follow years of calm.

We have some more good news. The National Credit Union Share Insurance Fund also performed well last year. Net income increased to $210 million, almost double the $119 million net income recorded 2022. This is one of the best operating results the NCUA has ever seen.

In addition to having no significant realized losses and stronger income than expected, the Share Insurance Fund had very little growth in insured shares, around $300 million. These three factors contributed to the year-end equity ratio rising to 1.30 percent, higher than our last update and above our projection of 1.27 percent.

Finally, overnight rates are projected to remain above 5 percent for the first half of 2024. As of December 31, 2023, the Share Insurance Fund’s investment portfolio contains almost $5.2 billion in overnight investments. In the current rate environment, NCUA plans to continue to keep a big share of the fund in overnights.