Number of CAMELS 3 credit unions ticks up in 3rd quarter, NCUA reports

The number of federally insured credit unions (FICUs) with examination codes of CAMELS 3 rose by six in the quarter ending Sept. 30, according to a report Thursday during the open meeting of the National Credit Union Administration (NCUA) Board.

The information was part of a board briefing on the National Credit Union Share Insurance Fund (NCUSIF), which by latest reporting by the agency had an equity ratio of 1.27% of insured shares as of June 30.

The agency said that at the end of the third quarter, three FICU failures cost the NCUSIF approximately $1.4 million in losses. Meanwhile, the fund reported a net income of $59.0 million, $20.9 billion in assets, and $113.4 million in total income for the third quarter of 2023.

On the breakdown of CAMELS ratings, the NCUA report shows:

  • The number of composite CAMELS code 3 credit unions increased from 771 to 777 at the end of the third quarter. Assets for these credit unions increased from the second quarter to $131.7 billion (5% of total FICU assets) from $91.0 billion. These institutions also hold 6.41% of all insured shares, the report shows.
  • The number of composite CAMELS codes 4 and 5 credit unions decreased from 134 to 131 at the end of the third quarter. Assets for these credit unions decreased from $6.3 billion to $5.4 billion (0.2% of total FICU assets). These institutions hold 0.28% of total insured shares.
  • The remaining FICUs – 3,751 out of a total 4,659 FICUs – had CAMELS codes of 1 or 2.

“The Share Insurance Fund’s performance in the third quarter of 2023 mirrors the industry’s financial performance over the last year,” NCUA Board Chairman Todd Harper said in a statement included in Thursday’s release. “Like the credit union system, the Share Insurance Fund is performing generally well overall. But, there are some flashing cautionary lights that we should all heed and act upon. For several months, the NCUA has reported signs of growing liquidity, interest rate, and credit risks within the credit union system. In today’s report, we see that stress firsthand, especially in large, complex credit unions with $500 million or more in assets.”

Of total CAMELS 3 credit unions, the report shows, 51 of them had total assets of more than $500 million. One FICU in the CAMELS 4 or 5 group had assets exceeding $500 million, it shows.

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NCUSIF presentation