NAFCU Report Says CUs Holding Steady but Fearful of New Regulations
Increased assessments by the NCUA coupled with more deposits and slower loan growth have put considerable strain on credit unions and they fear the impact of higher regulations, according to a report presented by NAFCU to the Federal Reserve Board today.
The "conservative and prudent management'' of many credit unions helped them weather the storm and many are well-capitalized and continuing to serve their members, the report added.
NAFCU presented the report to members of the Federal Reserve Board during the annual meeting that NAFCU's Board has with the Fed to discuss credit union issues.
One reason for the loan decline is that the recession and slow recovery caused federal credit unions to tighten their lending standards. According to a NAFCU survey taken in advance of the Fed meeting, 47.1% of respondents said they were tightening their standards for unsecured loans. That's a decline from 63.6% last year.
The survey also found that 56.2% of respondents tightened standards on unsecured credit cards and 40.6% tightened standards on first mortgages.
Respondents cited rising delinquencies and charge offs, declining property values and funding source constraints as key reasons for the higher standards.
The survey also found that 71% of respondents had seen increased foreclosure notices in the past year and 63.1% had an increase in real estate foreclosures.
The problems of corporate credit unions not only caused natural person credit unions to have to pay more to the NCUA, but also caused them to rethink how much money they want to deposit in them. The survey showed that only 5.1% of respondents will increase their lines of credit at the corporates, compared with 7.3% last year.
NAFCU's biggest regulatory fears are the new regulations likely to be issued by the Bureau of Consumer Financial Protection that will be launched next year and the cap on interchange fees that Congress authorized the Fed to set.
To read the report, visit NAFCU's website.