The net gain improved the stabilization fund's net position to -$5.25 billion, compared to -$7.46 billion as of Dec. 31, 2010, the NCUA said.

The stabilization fund's assets increased during 2011 to $1.2 billion, up from $377 million as of year-end 2011.

Much of the increase is due to $627 million in receivables from Asset Management Estates, which include the assets and liabilities of liquidated corporates. The net receivables represent $5.6 billion in gross receivables, less a $5 billion allowance for losses, the NCUA said.

A $279 million distribution receivable from the NCUSIF also inflated assets.  Distribution from the share insurance fund is required to equal the maximum amount possible that does not reduce the fund's equity ratio below 1.3% and available assets below 1.0%.

The outstanding principal balance of NCUA Guaranteed Notes was $24.7 billion as of year-end 2011, and represents the maximum potential future guarantee payments the NCUA could be required to make, not considering any possible recoveries, the agency said.

That amount is an increase from 2010's year-end balance of $17.3 billion, due to eight re-securitizations in 2011 with net proceeds of $10.6 billion.

The majority of these proceeds were used to repay promissory notes owed by the Asset Management Estates to the surviving Bridge Corporates. As of 2011 year-end, the aggregate outstanding amount of the promissory notes was $0, reduced from $18.2 billion as of Dec. 31, 2010, the agency said.

Total Legacy Assets collateralizing the 13 guaranteed notes have an aggregate unpaid balance of $34.3 billion, with a recovery value of $24.5 billion, as of Dec. 31, 2011. Credit ratings on the securities included in Legacy Assets fell during 2011.

The majority of legacy assets, 79% of unpaid principal balances, are residential mortgage backed securities. The percentage of RMBS below investment grade as of year-end 2011 was 88%, compared to 73% as of year-end 2010.

Recovery value estimations are dependent upon unknowns such as housing prices, the report said. Guaranteed note expected net losses recognized on the Stabilization Fund's balance sheet as of Dec. 31, 2011 were zero; however, changed assumptions regarding the decline of housing prices could result in estimated losses as high as $1.3 billion.

KPMG LLP, the independent firm that audits the Stabilization Fund's books, issued an unqualified audit opinion with no reportable findings.

"For the second year in a row, 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," Matz said.

In the 2010 audit, the NCUA and the Stabilization Fund were found to have a "significant deficiency" resulting from a "lack of sufficient preparation of the accounting and reporting of the Corporate System Resolution Program." According to KPMG, the status of that finding is now closed.

In its release, the NCUA said it has continued to strengthen the systems needed to handle the Stabilization Fund's many complex transactions, including those related to the NCUA Guaranteed Notes.

The NCUA reported it had also improved its internal control environment, which allowed the 2011 audited financial statements to be completed six months earlier than the 2010 statements.

The Stabilization Fund's 2011 audited financial statements are available on the NCUA's website.