INANCIAL STATE
MASSACHUSETTS CREDIT UNION SHARE INSURANCE CORPORATION AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEARS ENDED SEPTEMBER 30, 2022 AND 2021
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 2021, the Corporation established a general reserve for insurance losses of $2,000,000 to cover potential losses or other costs associated with restoring stability to member credit unions which may face financial or operational difficulties resulting from the adverse economic activity and financial uncertainty created by the COVID-19 pandemic. In 2022, the Corporation provided an additional $600,000 to increase the reserve to $2,600,000. While the pandemic concerns have subsided, member credit unions my now face financial and operational difficulties resulting from the economic uncertainty caused by inflationary concerns and geopolitical conflicts and instability. 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, 2022 and 2021, 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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2022 ANNUAL REPORT
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