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NCUA Board Member Rodney E. Hood Statement on the Share Insurance Fund Quarterly Report Board Briefing

May 2023
NCUA Board Member Rodney E. Hood Statement on the Share Insurance Fund Quarterly Report Board Briefing
Rodney E. Hood

Board Member Rodney E. Hood during a meeting of the NCUA Board.

As Prepared for Delivery on May 25, 2023

One of the unique aspects of the National Credit Union Share Insurance Fund is the monthly reporting to the public, which is especially relevant to the credit union owners of the 1 percent capital deposit. Additionally, the NCUA Board has quarterly briefings on the Share Insurance Fund to review and discuss the Share Insurance Fund to build trust and confidence within the credit union community concerning our management of their funds. This briefing maintains our commitment to the fiduciary duty we have as NCUA Board members. After all, credit union members effectively send one cent of every savings dollar of insured shares to the Share Insurance Fund.

This briefing also is relevant because it is a time to update the public on how our examiners are rating credit unions from a safety and soundness standpoint based on onsite exams. The numbers give a high-level view of how examiners rate the industry individually and overall from a performance and soundness standpoint.

After the recent and very public failures in the banking system in addition to the continued economic uncertainty during the past several months, I am pleased to note that the percent of shares in CAMELS code 4 & 5 credit unions, as a percent of all shares, is historically low at 0.29 percent of all shares. While we should remain vigilant, especially seeing the slight increase in the actual number of CAMELS 3, 4, and 5 credit unions overall, the credit union system remains strong up to this point.

Our public financial postings and disclosures and credit union performance highlight the unique character of the cooperative system—a system that was the basis for rejecting the FDIC premium models in years past and still in use today and designing a uniquely cooperative approach. The credit union system is a unique financial system, and our regulatory and Share Insurance Fund framework should reflect this.

I do have several questions:

  • On slide 14, I see the portfolio’s unrealized gains or losses. Can you discuss how the Share Insurance Fund manages the interest rate risk in the portfolio?
  • If market rates stay at or near their current levels, how long will it take the Share Insurance Fund to eliminate the unrealized market loss in years?
  • On slide 2, with the performance of credit unions being strong overall and nearly $20 million of prior loss expenses recovered, why is there a $12 million further expense added to reserves?
  • On slide 3, there is a $210.1 million capital deposit receivable. There is a $76 million receivable from the Corporate AMEs. These funds are not being invested, correct? When will those funds be collected and invested?
  • For the last several quarterly updates, I have discussed the timing issue on the true-up and the options the staff was considering. Can you please update the public on what you presented to the Board?

I have no further questions. Thank you.

Rodney E. Hood Share Insurance Fund
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