Stabilization Fund Reports First Positive Balance

The National Credit Union Administration reported a $51.2 million positive net position for the Temporary Corporate Credit Union Stabilization Fund on Thursday, the first time the Stabilization Fund’s assets have exceeded obligations. The second quarter report, which dates the position to June 30, reflects a gain of $91.6 million since the end of the first quarter.

According to the NCUA release, the gains “resulted primarily from improvements in projected cash flows relating to legacy assets that secure the NCUA Guaranteed Notes (NGN) Program.”

“The cash flows from the legacy assets along with NCUA’s prudent management of the NGN Program continue to yield improved Stabilization Fund performance,” NCUA Board Chairman Debbie Matz said. “The Board announced last November we do not plan a Stabilization Fund assessment for 2014, and at this time we don’t expect to charge any more assessments in the future.”

Credit unions should not expect refunds at this time, despite the positive balance, the release said, since the improving values of legacy assets are not liquid and secure the NGNs. 

The Stabilization Fund also has to repay the U.S. Treasury. After $300 million in repayments in the second quarter, outstanding borrowings from the Treasury stood at $2.6 billion. All obligations are scheduled to be repaid before the Stabilization Fund’s June 2021 expiration date.

The projected cash flows are estimates, the NCUA pointed out, and changes in the economy or the performance of the legacy assets are likely to change the value that the NCUA can eventually access at the end of the NGN Program.

Questions about this story? Contact James Pearson: 206.340.4790, jpearson@nwcua.org.

Posted in NCUA.