The net income improved the stabilization fund’s net position to negative $5.25 billion, compared to negative $7.46 billion as of Dec. 31, 2010.

That’s good news, Hampel said , because it means loss estimates on legacy assets are unchanged from 2010. Hampel noted that NCUA had reduced loss estimates by $1.5 billion in a corporate resolution report published in August 2011, but appear to have reversed that rosier picture in the fund’s 2011 financial reports.

“I don’t know if the valuation methods they use for year-end audited financial statements is different than those used for interim periods, like the report last August, or if the expectations were looking better during the first half of last year and didn’t look as good during the second half,” he said. “I can’t tell which is which. Credit unions need to remember these estimates are just guesses that depend upon unknowns future events.”

Industry analyst Marvin Umholtz said he reviewed the financial statements and found no new revelations. He said he expects the NCUA to assess credit unions between 8 to 11 basis points for corporate stabilization in 2012, as the agency had previously estimated.

Guaranteed notes generated $82.6 million in fees. Expenses totaled $125 million, including administrative expenses totaling $8.2 million, a $3.5 million increase over 2010.

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.

A $279 million distribution receivable from the NCUSIF also increased assets contributed to the improvement in the fund’s net position. 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%.

“That $279 million is what would have otherwise been a share insurance fund dividend,” Hampel said.

The share insurance fund is required to pay a dividend to credit unions when the fund’s equity ratio rises above 1.3%, and credit unions have received such a payout before, he said.

The NCUA would have done it again in 2011, he said, except because the stabilization fund had a borrowing from the U.S. Treasury, available funds must be used to pay down the account instead of paying it out to credit unions in the form of a dividend.

“At the end of the game, credit unions will have $280 million less of an assessment than they would have to pay otherwise, so it’s a good thing,” he said.

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.

That amount is an increase from 2010’s year-end balance of $17.3 billion, due to eight resecuritizations in 2011 with net proceeds of $10.5 billion. The majority of these proceeds were used to repay medium-term notes and the 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 zero, reduced from $18.2 billion at year-end 2010.

The NCUA added that the estimated losses from the guarantee of NGNs were zero at year-end.

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% for the 13 resecuritizations, compared to 73% for the first five resecuritizations that had been completed as of year-end 2010.

Hampel said that while the credit quality of the underlying assets may have fallen during 2011, it’s more likely the eight resecuritizations completed during 2011 represented securities of lower credit quality, which dragged down aggregate credit ratings.

“I don’t think it’s a change of quality, it’s different composition,” he said. “What’s most likely is that first deals were of higher quality.”

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.”

In the 2010 audit, the NCUA and Stabilization Fund was determined 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.