Credit Unions Have Rough Third Quarter, with Some Glimmers of Hope

Claude R. Marx
November 30, 2009 | COMMENTS

Credit unions reported increased delinquencies and charge-offs and modest returns on average assets but also saw increases in assets and shares, according to data released today by the NCUA.

The agency reported that based on call report data from the 7,637 federally insured credit unions, credit union net worth stayed above 10% as of September 30, and the percentage of delinquent loans rose to 1.68%, compared with 1.37% at the end of last year. Also, the ratio of net charge-offs to average loans was 1.17%, compared with 0.85% at the end of last year.

NCUA chairman Debbie Matz said the difficult times for credit unions is further evidence of the need for her agency to strengthen its examination process.

“These numbers buttress the case for increased regulatory oversight as credit unions deal with adverse economic conditions," she said in a statement. "While credit union net worth remains strong at 10.05%, and evidences a slight two basis point gain above the mid-year level, the overall environment for financial institutions and consumers remains challenging.”

Last Thursday, the NCUA Board approved a budget that is a 13% increase over the current budget and includes funding for 39 new examiners and 12 problem case officers. The agency also reported between last December 31 and September 30, assets increased 7.7%, loans grew 1.7%, shares increased 8.4%, investments increased 24.7% and membership increased 1.9%.

At last week's meeting, the agency reported that 5.58% of all insured shares are in credit unions with CAMEL 4 or 5 ratings, and there are 337 credit unions with such ratings. By contrast, at the end of December there were 271 credit unions with those ratings. In addition, there are 1,637 credit unions with CAMEL 3 ratings, compared with 1,540 at the end of last December.

This article was originally published in Credit Union Times at www.cutimes.com and is reprinted with permission.