Storm Clouds Continue To Hover Over NCUSIF

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ALEXANDRIA, Va. – NCUA said this morning that continuing losses projected for natural person credit unions forced it to raise its loss reserves to a new high of $1.3 billion at year-end, putting an exclamation point on the National CU Share Insurance Fund's worst year ever.

Adding to the ill portend was the fact that the reserve ratio for the fund began to decline again last month, even after NCUA added $930 million in premiums to reserves collected from credit unions over the past three months, according to Mary Ann Woodson, chief financial officer for the agency.

The falling reserve ratio, combined with lower yields being earned on the NCUSIF's $11 billion portfolio of Treasury securities points to an additional premium being assessed credit unions to rebuild reserves again--the third year in a row a premium would be assessed. Another big assessment to pay for the corporate credit union bailout is also expected this year.

NCUA said it ended the year paying for 28 credit union failures, the same as in 2009, however the cost of failures for 2010 was almost twice as much--$221 million--than the year before. About $1 billion of the reserves set aside for 2011 are unallocated, as several big credit unions continue to fend off insolvency.

Last year's failures included 18 involuntary liquidations and 10 assisted mergers, all considered failures.

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