Huge CU Losses Hit NCUSIF

ALEXANDRIA, Va. – (February 22, 2008) Buffeted by several large credit union failures, NCUA yesterday said the National CU Share Insurance Fund lost $185.4 million in December, the most losses for one month or for an entire year in the fund’s existence.

In December, NCUA moved $168.1 million in additional provisions for losses into the fund, which insures the nation’s credit union deposits and pays to liquidate failed credit unions. As a result, the fund had $215.8 million in loss reserves at year end 2008; $161.6 million of which is allocated for already identified problem credit unions.

Among the losses assumed by NCUA in the fourth quarter are those related to Norlarco CU, Huron River Area FCU and Cal State 9 CU, which wracked up more than $150 million in losses between them before being taken over by NCUA.

The additional loss reserves created a $108.3 million net loss for the fund for the month of December, and net income of just $55.7 million on the fund’s $7.4 billion portfolio of Treasury securities for the year, down from a budgeted $206.3 million in net income.

The huge losses make it highly unlikely NCUA will be paying a dividend to insured credit unions this year. (Credit Union Journal)