The federal fund that insures member deposits in credit unions closed 2024 at an equity ratio of 1.3%, 20 basis points higher than projected but 30 basis points less than the fund’s normal operating level (NOL) of 1.33%, according to a report Thursday to the federal credit union agency board.
The National Credit Union Share Insurance Fund (NCUSIF) had net income of $78.6 million, $22.3 billion in assets, and $145.9 million in gross income for the fourth quarter of 2024, according to a report provided Thursday during the open meeting of the National Credit Union Administration (NCUA) Board. Net income for the year was $301.5 million, the report shows.
Reserve expense (addition to the provision for credit union losses) was $5.3 million in the fourth quarter and $29 million for the whole year, it shows. The year-end reserve balance was $237 million. There were three credit union failures in 2024, and these cost the share insurance fund $2.03 million to resolve.
NCUA Chairman Kyle Hauptman said the year-end results provided “a lot of good news,” but he said vigilance is needed.
“Reductions in unrealized losses, increased interest revenue, and capitalization deposit adjustments throughout the year helped to increase the Share Insurance Fund’s assets by $924.6 million,” he said in a statement. “However, credit unions and the NCUA Board will need to continue to monitor economic and market conditions. Patience, flexibility, and sound balance sheet management will be vital in the year ahead.”
Agency Board Member Todd Harper, in prepared remarks, pointed again to downward trends in macroeconomic factors and composite CAMELS ratings behind the increase in reserves. He also reiterated a previous warning about the risks posted by complex credit unions.
“Complex credit unions pose the greatest risks to the Share Insurance Fund,” he said. “And, with 78 complex credit unions holding $141.2 billion in assets rated as a composite CAMELS code 3, 4, or 5, we must ensure that we have sufficient resources in place to prevent these institutions from causing losses in the future.”
Thursday’s report shows the number of composite CAMELS code 3 credit unions decreased from 730 to 715 at the end of the fourth quarter. Assets for these credit unions decreased from the third quarter to $188.8 billion from $189.8 billion. The number of composite CAMELS codes 4 and 5 credit unions decreased from 138 to 135 at the end of the fourth quarter. Assets for these credit unions decreased from $19.1 billion to $18.5 billion.
Menawhile, that 135 CAMELS codes 4 and 5 credit unions still include nine that have assets exceeding $500 million each, representing $13.2 billion in all as of year-end 2024, the report shows.
In other remarks, Harper focused on potential impacts of the Trump administration’s current push for staff cuts throughout the federal government’s agencies and departments.
“We must recognize that if exam and supervision staffing levels are lowered, we may need to increase the Share Insurance Fund’s normal operating level to maintain sufficient reserves for potential losses,” Harper said. “That’s because less frequent supervisory contacts, less comprehensive exams, and less oversight will likely lead to more credit union failures and increased Share Insurance Fund losses.
“Alternatively, we may need to alter our recordkeeping and reporting requirements to create a real-time monitoring system using innovative technology to identify risks. Regardless of the path we choose, I am committed to working with my fellow Board members to find the right balance to all these questions,” he said.
The one other item previously listed on the agenda for Thursday’s meeting was removed; there apparently has been no designation of an NCUA Board vice chairman.
Share Insurance Fund Report Highlights Asset, Income Growth in Q4 2024
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