Problem CUs Fell, NCUSIF Reserves Up Significantly, and NCUA Board Declares Dividend Distribution

The number of problem credit unions fell during the fourth quarter of 2017, according to the National Credit Union Administration (NCUA).

At the end of the fourth quarter of 2017, there were 196 problem credit unions. In comparison, there were 204 problem credit unions at the end of the third quarter.

A problem credit union has a composite CAMEL rating of 4 or 5.

Total assets and shares (deposits) in problem credit unions fell during the fourth quarter. Assets in problem credit unions were $9.6 billion at the end of the fourth quarter -- down from $10.2 billion at the end of the third quarter of 2017. Shares in problem credit unions decreased from $9.0 billion as of September 30 to $8.7 billion as of December 31.

NCUA reported that almost 89 percent of problem credit unions have less than $100 million in assets, while less than 2 percent have more than $500 million in assets.

At the end of the fourth quarter, 0.80 percent of total insured shares were in problem credit unions. At the end of the third quarter, 0.84 percent of total insured shares were in problem credit unions.

In a related news, reserves for the National Credit Union Share Insurance Fund (NCUSIF) increased from $286 million at the end of the third quarter of 2017 to $925.5 million at the end of 2017. There will be more to come on this increase in reserves, once NCUA releases its audited financial statements for the NCUSIF.

Despite the increase in NCUSIF reserves, NCUA Board declared a distribution from the NCUSIF of $735.7 million for December 2017, which will be paid in the third quarter of 2018. The merger of the Temporary Corporate Credit Union Stabilization Fund into the NCUSIF made the distribution possible. Otherwise, insured credit unions faced a premium of 12.2 basis points per insured shares to restore the NCUSIF to its prior normal operating level of 1.30 percent of insured shares.