NCUA Chairman Kyle S. Hauptman during the February 27 meeting of the NCUA Board.
As Prepared for Delivery on February 27, 2025
Thank you, Eugene, for your presentation on the performance of the Share Insurance Fund in 2024. I also congratulate you and everyone in the Office of the Chief Financial Officer for ensuring the NCUA’s four funds each earned another unmodified, or “clean,” audit opinion. This consistency underscores the NCUA’s commitment to sound financial management of the resources entrusted to us. I also want to acknowledge the work and contributions of the Office of Inspector General and the NCUA’s independent auditor, KPMG, during the annual audit. Thank you.
There is a lot of good news here. I’m pleased to see the Share Insurance Fund remains strong. The year-end equity ratio is a healthy 1.30 percent for the third year in a row. As Eugene noted, that level is 2 basis points higher than the NCUA’s initial projection, largely due to lower-than-forecasted share growth during the year. Investment income increased slightly from $145.6 million last quarter to $145.9 million at end of the year. That’s a small increase quarter-over-quarter, but it is, as Eugene mentioned, a 16-percent increase in investment income compared to 2023. Reductions in unrealized losses, increased interest revenue, and capitalization deposit adjustments throughout the year helped to increase the Share Insurance Fund’s assets.
And insured shares and assets in CAMELS code 3, 4, and 5 credit unions decreased slightly in the fourth quarter. We are not out of the woods, but that decrease is welcomed news as we saw increases in both categories over the last year. Yet, the number of failures for 2024 remained low with three credit union failures costing the Share Insurance Fund just over $2 million in losses. Again, all good news.
However, credit unions and the NCUA Board will need to continue to monitor economic and market conditions. Recent economic data painted a mixed picture of the economy at the start of 2025. Inflation stubbornly remains above the Federal Open Market Committee’s 2-percent target. The Federal Reserve is holding rates at their current level to evaluate where inflation and the economy are going. If higher-than-expected inflation continues, the Fed will be less likely to lower the federal funds target rate, unless there is significant deterioration in the labor market. Significantly higher inflation could even lead to the Fed raising interest rates.
Bottom line: All this uncertainty means credit union managers and boards of directors must be prepared for a variety of interest rate scenarios and economic conditions. Patience, flexibility, and sound balance sheet management will be vital in the year ahead.
That concludes my remarks. I now recognize Board Member Harper.