CAMELs Drive Down SIF Reserve

NCUA Chairman Debbie Matz and Board Member Michael Fryzel stuck to a controversy-free agenda during the agency’s October board meeting last week. Among the news was a report that  improving 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 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 nonspecific reserves, she said.   Woodson reported that as of Sept. 30, 382 credit unions had CAMEL codes of 4 or 5, 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.

Sixteen credit unions have failed so far this year, resulting in nine liquidations, six of which involved purchase and assumptions of remaining assets, and seven assisted mergers.