ARLINGTON, Va.—At Thursday’s board meeting, NCUA reported that agency expenditures are estimated to decline by approximately $5.8 million for 2017, based on current projections of agency needs.
The NCUA’s revised 2017 operating budget estimate is now $292.2 million. Reduced spending was noted for the following expense categories:
- A $2.5 million reduction in pay and benefits, based on factors such as the hiring freeze earlier this year, employee turnover, and projected hiring and attrition rates
- A $1.4-million reduction in travel costs
- A $1.2-million reduction in contracted services
- A $516,000 reduction in administrative costs
- A $122,000 reduction in rental costs
The NCUA currently operates on a two-year budget cycle. The 2018 budget is scheduled to be reviewed at the board’s November open meeting. The agency plans to host a public budget briefing in the fall.
In other business:
The Share Insurance Fund in the second quarter of 2017 posted net income of $49.3 million, primarily due to a decrease in the provision for insurance losses, NCUA reported Thursday.
The fund’s net position was $13 billion at the end of the quarter.
Second-quarter investment and other income was $49.2 million. Operating expenses were $49.4 million. The provision for insurance losses decreased by $49.5 million.
As of June 2017, the calculated equity ratio is 1.22%, based on estimated insured shares of $1.1 trillion. However, when adjusted for the projected 1% deposit capital adjustment recognized in September, for all federally insured credit unions with assets of $50 million or greater, the equity ratio is estimated to remain at 1.26%, NCUA said.
Insurance fund notes:
- The number of CAMEL codes 4 and 5 credit unions increased by 6.6% from the first quarter of 2017, to 210 from 197
- Assets in CAMEL codes 4 and 5 credit unions increased 11.6% from the first quarter to $10.6 billion from $9.5 billion
- The number of CAMEL code 3 credit unions declined 1.3% from the first quarter to 1,088 from 1,102
- Assets in CAMEL code 3 credit unions declined 1.7 percent from the first quarter to $53.6 billion from $54.5 billion
There were no credit union failures during the second quarter of 2017, compared to six credit union failures in the second quarter of 2016. Year-to-date, two federally insured credit unions failed during the first two quarters of 2017, compared to 11 in the first two quarters of 2016. Total year-to-date losses associated with credit union failures are $3.8 million, compared to $8.5 million in the first two quarters of 2016. Fraud was a contributing factor in one of the two failures, NCUA said.
Emergency Merger Rule Approved
The NCUA would have additional flexibility in situations warranting emergency mergers under a proposed rule approved 2-0 by the board Thursday.
The proposed rule would amend the definition of the phrase “in danger of insolvency” in the agency’s Chartering and Field of Membership Manual. The current definition requires credit unions to fall into at least one of three net worth categories over a period of time in order to be found in danger of insolvency. The proposed rule would lengthen by six months the time period for two of those categories. The proposed rule would also add a fourth category, to include credit unions that have been granted or received Section 208 assistance within the 15 months before a determination of a danger of insolvency has been made.