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No Share Insurance Fund Premium for 2014

October 2014
No Share Insurance Fund Premium for 2014

Board Action Bulletin

Board Approves Proposed Amendments to Corporate, Flood Insurance Rules 

ALEXANDRIA, Va. (Oct. 23, 2014) – The National Credit Union Administration Board convened its ninth scheduled open meeting of 2014 at the agency’s headquarters here today. The Board unanimously approved two items:
  • A proposed rule making technical corrections to the agency’s corporate rule.
  • A proposed joint agency rule amending flood insurance regulations. 
The Chief Financial Officer also briefed the Board on the performance of the National Credit Union Share Insurance Fund, which showed positive third-quarter results.
Credit Unions Will Not Pay a 2014 Share Insurance Fund Premium
The Share Insurance Fund ended the third quarter of 2014 with a net income of $24.6 million and an equity ratio of 1.30 percent. The equity ratio is calculated on an estimated insured share base of $895.7 billion and reflects the capitalization deposit adjustment billed in September.
“With the Share Insurance Fund on a sound footing, NCUA will not charge federally insured credit unions a premium in 2014,” NCUA Board Chairman Debbie Matz said. “The number of troubled credit unions continues to decline, and insurance losses remain manageable. Prudent regulation and supervision of a credit union system that continues to be strong and stable have kept the Share Insurance Fund at the maximum equity ratio permitted by law.”
Third-quarter investment and other income was $54 million; operating expenses were $48.1 million; and the provision for insurance losses was reduced by $18.7 million. Net income for the third quarter was $24.6 million. The third-quarter figures are preliminary and unaudited.
Shares in troubled credit unions, those rated CAMEL code 4 or 5, were 1.38 percent of federally insured credit union shares for the third quarter, an improvement compared to 1.46 percent in the second quarter. Also, for the third quarter:
  • The number of CAMEL code 4 and 5 credit unions fell 9.1 percent from the third quarter of 2013 to 288.
  • Assets of CAMEL code 4 and 5 credit unions were $14 billion, a 10.3 percent decline from the third quarter of 2013.
  • The number of CAMEL code 3 credit unions declined 2.2 percent from the third quarter of 2013 to 1,450.
  • Assets of CAMEL code 3 credit unions were $104.7 billion, a 3.4 percent decrease from the third quarter of 2013. 
Four federally insured credit unions failed during the third quarter of 2014. Total year-to-date losses associated with credit union failures were $30.4 million, of which $28.6 million was related to fraud.
Board Approves Proposed Technical Amendments to Corporate Rule
Proposed technical amendments to the corporate credit unions rule (Part 704) approved by the NCUA Board would simplify and clarify several parts of the rule and facilitate compliance.
The housekeeping amendments do not undermine safeguards in the existing rule, which include investment restrictions and capital standards.
“To prevent a recurrence of the corporate crisis, the NCUA Board finalized substantive changes to the corporate rule four years ago,” Matz said. “The technical amendments we’re making today would clarify these rules and provide corporate credit unions a measure of regulatory relief. In particular, I strongly support the provision allowing surviving corporates to continue counting retained earnings acquired in mergers, which will remove a significant accounting hurdle and reduce future risks to the Share Insurance Fund.”
Comments on the proposed rule, available here, must be received within 60 days of publication in the Federal Register.
Board Approves Proposed Joint Agency Flood Insurance Rule Changes
NCUA joined four other federal agencies in approving a proposed rule to amend the regulation on lending in areas having special flood hazards (Part 760).
The proposed rule would establish requirements with respect to the escrow of flood insurance payments to be consistent with changes in the Homeowner Flood Insurance Affordability Act of 2014. The proposed rule also includes a new exemption no longer requiring separate flood insurance for certain detached structures.
The Office of the Comptroller of the Currency, the Federal Reserve Board of Governors, the Federal Deposit Insurance Corporation and the Farm Credit Administration have also approved the proposed rule.
Comments on the proposed rule, available online here, must be received within 60 days of publication in the Federal Register. Interested parties are encouraged to submit comments jointly to all the agencies.

NCUA tweets all open Board meetings live. Follow @TheNCUA on Twitter, and access Board Action Memorandums and NCUA rule changes at NCUA also live streams, archives and posts videos of open Board meetings online.

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