ALEXANDRIA, Va.-According to NCUA's recently released annual report, the agency and federally insured credit unions are still weathering the painfully slow economic recovery fairly well. NCUA finished 2002 with a net income of $3.6 million in its operating fund. The agency had budgeted for $147 million in expenses, but actual expenses only reached $134.2 million. Of those expenses, $83.2 million came from the National Credit Union Share Insurance Fund through the overhead transfer and another $51.0 million came from the operating fund, $4.8 million below the budgeted amount. Though still standing strong, the NCUSIF took its hardest beating in recent years. The fund had $214.5 million in total revenue, the lowest amount since 1997. While operating expenses were down more than $5 million from 2001, the NCUSIF experienced its first insurance losses, totaling $12.5 million, since 1994. However, the loss in 1994 was much higher at $26 million, and much higher in 1993. Total losses were the highest since 1993, when they came to $103.6 million. CUNA Chief Economist Bill Hampel commented that, even in those years NCUSIF was not recording a loss, it still experienced low-level losses, but they were counteracted by the high level of reserves the fund held. Once the fund was depleted to a level where the agency felt the need to bolster reserves, the losses were recorded on the books again as an expense under provisions for insurance losses, as is standard accounting procedure, he explained. The NCUSIF's reserves for losses stood at the lowest point in recent years ($47.5 million, down from $51.0 million in 2001 and $78.7 million in 1998). Hampel pointed out that the losses in 2002 really were not much higher than previous years. NAFCU Director of Research and Analysis Tun Wai pointed out that while the number of troubled credit unions is not alarming, the assets of the troubled credit unions continue to grow. "I think they're being very prudent," he remarked of NCUA. Net income was also at its lowest since 1994. "Given the low interest rates, the issue they have now is earnings on their investments." Hampel explained, which is to be expected. The fund's equity ratio was just shy of the 1.3% target set by the board at 1.27%. 2002 was the second year the NCUSIF missed the equity ratio target after six years of exceeding it. The Central Liquidity Facility claimed assets of $1.09 billion last year, up from $985 million in 2001. While the number of federally insured credit unions dropped from 9,984 in 2001 to 9,688 in 2002, their total assets hit $557.1 billion. Total insured shares grew to $441.5 billion, up from $402.7 billion in 2001. Federally insured credit unions' aggregate net worth ratio was 10.7%, a slight decline from 2001′s 10.8%. In 2000, the ratio came to 11.4%. Credit unions carrying federal insurance achieved a 70.8% loan to share ratio and delinquencies were 0.8%. Believe it or not, merger activity among federally insured credit unions actually slowed in 2002 to 272 from 300 in 2001. This was down from 323 in 1999. [email protected]