NCUA Annual Report: Conditions Improved, Challenges Remained
The credit union industry’s health got slightly better last year but there is still much room for improvement.
That’s the message the NCUA sent Congress in its annual report it released this week.
“As the economy began to recover, the overall financial condition of the credit union industry stabilized and improved, with federally insured credit unions (FICUs) reporting progressively stronger financial ratios in 2010 compared to the prior year. Improved earnings and controlled asset growth led to an increase in credit union system capital,’’ the report said.
The agency cited its efforts to rescue some of the corporate credit unions, including the revamp of its regulations of that sector, as a highlight of its regulatory work last year. It also said that increasing the frequency of the examination of all credit unions – from once every 18 months to once a year – was an integral part of its efforts to improve the industry’s financial health.
In 2010, the agency spent 634,585 hours on examinations, compared with 584,159 hours in 2009. There were $914.5 billion in assets in credit unions as of Dec. 31, compared with $884.6 billion at the end of December 2009.
Industry earnings, as measured by return on average assets ratio, increased to 0.51% as of last Dec. 31, compared to 0.18% at the end of 2009.
However, there was a $7.7 billion (1.3%) decline in total loans, from $572.4 billion in 2009 to $564.9 billion in 2010.
On the positive side, there were fewer problems with the loans made by credit unions.
At federally insured credit unions 1.74% of all loans were delinquent, compared with 1.84% in 2009.
Real estate loans made up 54.8% of all loans at those credit unions and vehicle loans made up 29.1%. At the end of last year, 359 credit unions with total shares of $38.5 billion had CAMEL 4 or 5 ratings, representing 5.1% of all insured shares.
In 2010, 28 natural person credit unions failed, the same number as in 2009.
There were 7,339 federally insured credit unions at the end of 2010, compared with 7,554 at the end of 2009. There were 90.5 million members of federally insured credit unions as of last December 31, compared with 89.5 million at the end of 2009.
The full report can be viewed online.