The NCUA said the number of credit unions in its riskiestcategories has dropped for 10 straight quarters and now account forabout one-eighth of the industry's assets.

Credit unions with CAMEL Codes 3, 4 and 5 were at 12.5% ofindustry assets as of March 31, down from a high of 21.9% atyear-end 2010, the NCUA Board was told at its monthly meeting onThursday in Alexandria, Va.

The agency said there are 339 credit unions at code 4 and 5 and1,571 at code 3.

The board also was told that the NCUSIF ended the first quarterwith net income of $9.4 million and equity ratio of 1.31%, justmore than the statutory normal operating level of 1.3% calculatedon a year-end 2012 insured base of $839 billion, the NCUA said.

The Temporary Corporate Credit Union Stabilization Fund,meanwhile, had had $5.1 billion in outstanding borrowings with theU.S. Treasury on March 31, a net deficit of $3.5 billion which theNCUA said was a slight improvement from year-end based on netincome of $14.4 million in the first quarter.

The agency said four federally insured credit unions failed in the first quarter of 2013, with associated losses totaling $75,000, and that the reservebalance for the insurance fund was reduced from $412.5 million to$330.4 million during the first quarter.

“The Share Insurance Fund and the Stabilization Fund reflect an improving economy, a resilientcredit union industry, continued prudent financial management, andcommon-sense regulation,” NCUA Board Chairman Debbie Matz said in astatement.

“Assets at risk in credit unions with CAMEL codes 3, 4 and 5have dropped for 10 straight quarters and with that, so has ourlevel of exposure to potential losses. While we cannot predict thefuture with certainty, the growing strength of credit unions as awhole is a very positive sign,” Matz said.

NAFCU President/CEO Fred Becker said in a statement after theNCUA announcement that the trade group was pleased the agency didnot assess a share insurance premium in 2012 and hopes that nonewill be needed this year.

“In terms of the TCCUSF, we continue to strongly urge NCUAto carefully review its loss projections, and lower reserveprojections accordingly,” Becker added, “to decrease this year's corporate stabilization premiumassessments lower than the agency's previous estimates as itsestablished criteria would indicate.”