The National Credit Union Administration (NCUA) reported today that the number of problem credit unions fell during the third quarter; but shares (deposits) and assets at problem credit unions edged higher during the quarter.
At the end of the third quarter, there were 201 problem credit unions. In comparison, there were 209 problem credit unions at the end of the second quarter of 2016 and 233 credit unions at the end of the third quarter of 2015.
A problem credit union has a composite CAMEL rating of 4 or 5.
During the third quarter both total shares (deposits) and assets in problem credit unions rose. Shares in problem credit unions increased from $8.4 billion as of June 30, 2016 to $8.6 billion as of September 30. Over the same time period, assets in problem credit unions rose from $9.5 billion to $9.7 billion. A year earlier, problem credit unions held $7.6 billion in shares and $8.5 billion in assets.
According to NCUA, 0.86 percent of total insured shares and 0.8 percent of industry assets were in problem credit unions at the end of the second quarter.
Ninety percent of problem credit unions have less than $100 million in assets and approximately 1 percent have assets in excess of $500 million.
In addition, National Credit Union Share Insurance Fund (NCUSIF) reported an increase in reserves from $178.9 million at the end of August to $182.6 million as of September 30.
A presentation by the NCUA staff to the NCUA Board estimated that 2017 NCUSIF premiums would likely range between 3 basis points to 6 basis points, as the projected NCUSIF equity ratio next year will be between 1.24 percent to 1.27 percent -- below the Normal Operating Level of 1.30 percent of insured deposits. Staff stated that these estimates are for budgetary planning purposes of credit unions. Staff further stated that credit unions should not accrue for this expense until future action by the NCUA Board to actually charge a premium in 2017.
According to staff analysis, a premium of 3 basis points would cause an additional 110 credit unions to report negative net income after the premium. If the premium is 6 basis points, an additional 219 credit unions would report a loss after the premium.
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Once again the retired ABA watchdog scoops CUNA and Nafcu.
ReplyDeleteWhy is the fund expected to be short?3to6bp is not minor.
ReplyDeleteDo they need to move yet more of its dollars over to the Corporate CU bailout fund?
Taxi medallion loan write-offs?
Both?
I believe it is a combination of several factors -- weaker revenues from investments due to low interest rates, increase in reserves for possible CU failures, and stronger deposit growth.
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