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NCUA Chairman Todd M. Harper Statement on the Quarterly Update on the National Credit Union Share Insurance Fund

November 2021
NCUA Chairman Todd M. Harper Statement on the Quarterly Update on the National Credit Union Share Insurance Fund
Chairman Todd M. Harper

NCUA Chairman Todd. M. Harper at the NCUA's headquarters in Alexandria, Virginia.

As Prepared for Delivery on November 18, 2021

Thank you, Eugene, for that update on the performance of the Share Insurance Fund in the third quarter of 2021. As always, you and your team did an excellent job in preparing today’s briefing. Myra, thank you also for being available to answer questions.

Despite the many challenges of the pandemic, credit unions have pressed forward, doing their part to support their members and the communities they serve. And, so far, the credit union system and the Share Insurance Fund have weathered the pandemic well and remain strong.

The Share Insurance Fund now stands at more than $20 billion in assets, almost double its asset size a decade ago. This strength reflects the growth and stability of the credit union system over the last decade and the steady management by staff and oversight of the Fund by this and previous NCUA Boards.

We should all be proud of the resiliency of the credit union system in the wake of the pandemic. However, I must caution everyone not to let their guard down. With the end of several pandemic-relief measures, many credit unions could see a rise in delinquencies and charge-offs as their members experience financial stress.

While the Share Insurance Fund is showing solid performance and the equity ratio is projected to rise to 1.28 percent at the end of the year, the NCUA must continue to monitor credit union performance and economic developments. Additionally, the stresses on the equity ratio from continued share growth, the low interest-rate environment, at least historically, and insurance losses remain. The agency will need to continue to analyze the Fund’s risk exposure.

Eugene and Myra, I do have a few questions. Slide 2 shows no Guarantee Fee Revenue in the third quarter. Can you explain what Guarantee Fee Revenue is and why it has decreased?

Thank you for clarifying that. I also frequently get questions from credit unions about how we recognize revenue from the semi-annual capital deposit adjustments. I understand that you and your team used a third party to review our accounting methodology. Can you explain that process, why you did this review, and what were the results?

Thank you for explaining those results in detail and clarifying how we project and account for potential losses to the Share Insurance Fund. It is good to know that we are following accounting rules. It is also good to know that our accounting methods would result in the same conclusions, regardless of whether we use government or commercial accounting.

That concludes my remarks. I now recognize Vice Chairman Hauptman.

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