First Quarter Report on NCUSIF Brings Good News

The fund reports a $186 million positive variance to budget.

 
 

April’s NCUA Board meeting included a March 31 report on the NCUSIF that should be good news for the entire system. Instead of the budgeted $163 million year-to-date loss, the fund actually reported a $22.8 million year-to-date net income.

This total of $186 million better-than-budget is before the overall results of the credit union system for the first quarter have been reported.

The data demonstrates the value of the NCUSIF's monthly report in helping credit unions project the potential for premiums. At this rate of improvement versus budget, the fund would have an annual net income of more than $700 million, meaning the prospect of a premium due to natural person losses becomes remote. 

The charts distributed with the financials also show stable to positive trends.  The NCUSIF’s operating ratio is 1.26%, up from 1.23% at year-end. Total code 4 and 5 credit unions are at 349, down from the peak in January, and the percentage of shares in code 4 and 5 also declined by 14 basis points from January.  

The only negative note reported in the handouts is a $1.034 billion increase in the March provision for corporate losses. There is little information to understand how that 20% increase in one month was determined. There was a reference to a decline in the cash flows for mortgage-backed securities. Were the original estimates wrong? Which corporate caused the revision? Why is the loss taken now and what securities have fallen that much in value in just one month?

So, the news is positive. The corporate update still needs a lot more transparency for all users. 

 
 

May 4, 2010


Comments

 
 
 
  • excellent report
    Anonymous
     
     
     
  • The analysis lacks in two major areas: 1. There is no discussion of the impact of NCUA ignoring FASB when utilizing capital levels for corps as of 11-08. Hides how many of the corps have truly failed by any acctg standard. 2. Likelyhood of what will be the cause of qualified audits for NCUA for 08 and 09. I would hate to be an examiner telling a CU to follow FAS.
    Charles