NCUSIF Health Is Stable
The NCUSIF’s equity ratio remained at 1.31% for the third consecutive month in September, according to a report to the NCUA board by the agency’s chief financial officer Mary Ann Woodson at its Oct. 27 meeting.
The fund’s income was $3.6 million in September and has been $230.7 million this year. When the agency prepared the budget last year, during a much more difficult economic climate, the fund was projected to lose $420 million during the first nine months of 2011.
At the end of the year, any money in the NCUSIF above the 1.3% equity ratio will be transferred to the Temporary Corporate Credit Union Stabilization Fund, which is used to repay the Treasury Department’s loan for rescuing the corporate credit union system.
There have been 13 natural person credit union failures this year, compared with 28 for all of 2010. These failures have cost the fund $46.8 million. Of those failures, 12 have been involuntary liquidations and one was an assisted merger.
At the end of September, 3.88% of insured shares were in CAMEL 4 and 5 credit unions, compared with 3.96% at the end of August and 5.13% at the end of last year.
As of Sept. 30, 16.59% of insured shares were in CAMEL 3 credit unions, compared with 16.75% at the end of August and 18.26% at the end of last year.
At the meeting, the board also approved new rules for the agency’s Community Development Revolving Loan Fund.
Credit unions could borrow more money, won’t necessarily have to put up matching funds and won’t have to submit a community needs plan.
The changes allow credit unions to possibly borrow more than the previous limit of $300,000. The regulation notes that the maximum will probably stay at $300,000 but “may exceed this amount in certain circumstances.”
Credit unions won’t necessarily have to put up matching funds, as is currently required, but the agency may require funds depending on the credit union’s financial condition. Any matching funds couldn’t come from government sources because the agency doesn’t want to encourage “over dependence” on government funds, according to explanatory note accompanying the regulation.
The new rule eliminates the requirements that credit unions applying to fund have to provide a community needs plan and make financial projections.
Instead, credit unions have to provide a narrative describing how they will use the money. Such a narrative must also demonstrate how the funds will support the community’s economic development.
While financial projections aren’t required, the agency reserves the right to require them on a case-by-case basis. The rule requires nonfederally insured credit unions that apply for loans to agree to be examined by the NCUA.