Improving CAMEL Scores Prompt Reduction of SIF Reserves: Onsite Coverage
ALEXANDRIA, Va. — Improved CAMEL ratings resulted in a $147.2 million reduction in reserves during the third quarter for National Credit Union Share Insurance Fund, Chief Financial Officer Mary Ann Woodson reported during Thursday’s board meeting.
Woodson said the fund’s reserve balance fell from $606.6 million as of June 30 to $484.9 million as of Sept. 30. Of the $485 million in reserves, $171 million is set aside for specific reserves, with the remaining $314 million tagged for non-specific reserves, she said.
As of Sept. 30, 382 credit unions had CAMEL code 4 or 5 scores, a decrease of 17. The most notable decrease was in the $100 million to $500 million asset category, where 10 credit unions improved their position. CAMEL 4 and 5 credit unions represent 2.8% of insured shares and $26.3 billion in assets, Woodson said.
The number of CAMEL code 3 credit unions also improved during the third quarter, with Woodson reporting 1,639 credit unions receiving the designation, down from 1,679 as of June 30. CAMEL 3 credit unions represent nearly 14% of insured shares and $116.5 billion in industry assets, she said.
The fund had a 1.32% equity ratio as of Sept. 30, Woodson said. Answering a question from NCUA Chairman Debbie Matz, Woodson added that she expects the NCUSIF to have a 1.30% equity ratio at year end, with any excess over that statutory requirement transferred to offset corporate stabilization fund debt.
The low interest environment is taking its toll on the share insurance fund’s investment portfolio, as the fund saw four investments worth a total of $400 million mature during the third quarter, with rates ranging from 1.08% to 3.87%. They were replaced by five new investments worth $458 million, which will earn much less, between 0.84% and 1.64%, Woodson said.
Federally insured credit unions improved their net position in the Temporary Corporate Credit Union Stabilization Fund in September to a $4.356 billion deficit thanks to $792 million in special assessments, Woodson said.
The corporate fund also gained $160.5 million during the third quarter from the sale of assets held by the NCUA’s Asset Management Estates and another $19.58 million from fee revenue off the NCUA Guaranteed Notes, securities formed from corporate legacy assets and sold to investors.