Share Insurance Fund Continues to 'Perform Well' in 2022

On Thursday, the NCUA board received its quarterly update on the National Credit Union Share Insurance Fund (NCUSIF), which showed an uptick in net income while total assets declined slightly.

NCUA board members, briefed by agency officials, found the NCUSIF’s net income sat at $54.4 million and the net position for the first quarter of 2022 was positioned at $20.4 billion. According to the data, the NCUSIF’s total assets dropped from $20.7 billion in the fourth quarter of 2021 to $20.6 billion as of March 31.

“The Share Insurance Fund continued to perform well in the first quarter,” NCUA Chairman Todd Harper said. “Quarterly net income rose by approximately $42 million due to the continued reduction of expected losses associated with the remaining legacy assets of the Corporate System Resolution Program. That is positive news. We are now seeing a normalization of the Share Insurance Fund’s performance to what it was before the board decided to fold the Temporary Corporate Credit Union Stabilization Fund into the Share Insurance Fund.”

According to a staff presentation, the NCUA projected the equity ratio for the SIF will be 1.25% by June 30. That number is down from the 1.26% at the end of 2021 and in between the statutory minimum of 1.20% and the normal operating level set by the NCUA board of 1.33%.

“Nevertheless, we continue to see a slow, steady decline of the equity ratio due to continued elevated insured share growth and low interest rates, at least from a historical perspective,” Harper said.

He continued, “As such, the NCUA board must continue to monitor the Share Insurance Fund’s performance and remain ready to act. Such monitoring includes assessing the effects of the changing interest-rate environment on the fund’s portfolio. We already see the effects of rising interest rates on the fund’s balance, as we recorded unrealized losses in the first quarter.”

According to the presentation given to the NCUA board, other first-quarter updates included:

• The number of composite CAMEL codes 4 and 5 credit unions decreased from 129 to 125 at the end of the fourth quarter of 2021. Assets for these credit unions decreased from the fourth quarter of 2021 to the first quarter of 2022, to $3.8 billion from $8.8 billion.
• The number of composite CAMEL code 3 credit unions decreased from 752 to 751 at the end of the fourth quarter of 2021. Assets for these credit unions increased from the fourth quarter of 2021, to $43.8 billion from $43.0 billion.
• There were two federally insured credit union failures that cost the Share Insurance Fund approximately $200,000 in losses.