NCUA Annual Report Shows CU Industry Is on Solid Ground
The NCUA’s 2022 Annual Report also looks ahead at a number of financial risks to the CU system.
On Tuesday, the NCUA released its 2022 Annual Report, which lays out the NCUA’s performance in meeting its strategic goals and objectives, and it found the credit union industry and the agency’s four funds are on solid footing. What lies ahead appears to be a number of challenges and potential risks to the system as a whole, according to the report.
In the 244-page document, the NCUA focused on five broad categories in which the agency called important initiatives in 2022. Those five categories were:
- Responding to evolving economic and financial challenges;
- Strengthening the credit union system’s capital levels;
- Increasing cyber resiliency;
- Supporting small credit unions and minority depository institutions; and
- Fostering greater diversity, equity, inclusion and belonging.
In the report, NCUA Chairman Todd Harper stated, “In 2022, the NCUA focused its efforts on protecting and benefiting more than 135 million credit union members, who entrust their hard-earned savings to federally insured credit unions.”
Harper added, “Looking ahead, the NCUA will remain focused on risks to the system involving interest rates, liquidity, cybersecurity and consumer compliance. And, we will continue our efforts to enact needed legislative reforms like enhancements to the Central Liquidity Facility and restoring third-party vendor authority.”
The NCUA board, as stated in the report, spent 2022 acting on several forward-looking measures to help secure the credit union industry for what has turned out to be a tumultuous year for the banking industry. According to the report, the board acted on a number of proposed rules related to financial innovation, amending the subordinated debt rule and new cyber notification requirements.
Other notable steps taken by the agency in 2022 included adopting “a new enterprise risk appetite statement, developed the Information Security Examination, released the Simplified CECL Tool, implemented the CAMELS rating system and risk-based capital standards, and deployed the new MERIT examination system,” the report stated.
“As we navigate through the challenges that 2023 will pose, the NCUA will continue to address the needs and best interests of credit union members while also ensuring the safety and soundness of credit unions and protecting the Share Insurance Fund from losses,” Harper said. “We will work to allow the credit union system to innovate responsibly and evolve. By staying focused on these issues, the agency will ensure that the cooperative credit union system achieves its full potential, especially in meeting the credit and savings needs of people of modest means.”
According to the Annual Report, the NCUA’s four funds received unmodified or clean opinions for 2022, after an audit. The four funds include the following: Share Insurance Fund, Operating Fund, Central Liquidity Facility and the Community Development Revolving Loan Fund.