MSIC 2023 Annual Report

MASSACHUSETTS CREDIT UNION SHARE INSURANCE CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2023 AND 2022

N OTE 2 - S UMMARY OF S IGNIFICANT A CCOUNTING P OLICIES (C ONTINUED ) U SE OF E STIMATES AND R ESERVE FOR I NSURANCE L OSSES (C ONTINUED )

In 2022, the Corporation provided an additional $600,000 to increase the reserve to $2,600,000. As pandemic concerns have subsided, the Corporation reduced the reserve during 2023 by $1,300,000. The reserve is adjusted to a level deemed appropriate by management through a charge or credit to operations. Actual losses are charged to the reserve when realized. As of September 30, 2023 and 2022, no actual losses have been incurred by the Corporation. R EGULATORY M ATTERS Prior to 1994, as one of the safety and soundness prerequisites for obtaining federal insurance, credit unions had to meet specified capital levels as determined by the NCUA. This capital level varied by credit union based on the asset quality of the institution as evaluated by the NCUA. As the predecessor primary insurer and as a condition for credit unions obtaining federal primary insurance, the Corporation had infused capital, under capital infusion agreements, totaling $6,271,894 into those credit unions that were deemed capital-deficient by the NCUA. The capital infusion agreements provide for the repayment of the infused capital at a future date when the credit union’s net capital exceeds percentages defined in the agreement and said repayment receives regulatory approvals. However, due to the uncertainty as to when the regulatory approvals will be attained, management has elected to treat future repayments of capital assistance as revenue in the period received.

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2023 ANNUAL REPORT 83

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