NAFCU Reports on State of Credit Unions in Meeting with Fed
NAFCU presented a generally favorable report on the health of credit unions during its meeting with leaders of the Federal Reserve Board.
“While credit unions never stopped ending and loan growth continues to be negatively impacted by the ongoing financial turmoil and regulatory burdens, loan quality remains far higher than that of other financial institutions. Credit unions’ financial soundness and profitability have been steadily improving, in recent years as well,’’ according to the report submitted at the meeting on Thursday.
The trade association backed up its conclusions with data indicating that there were improvements in return on average assets, asset growth and net income, during the first half of this year.
Shortly before the meeting occurred, the NCUA released data that indicated that those trends continued during the third quarter, except net income.
The net income of federally insured credit unions grew $1 billion in the third quarter of 2011, down from $1.9 billion in the previous quarter. That’s because of the assessment that the NCUA levied on credit unions to pay for this year’s portion of the rescue of the corporate credit unions.
This year’s assessment was 25 basis points and the agency is projecting that next year’s will be between 8 and 11 basis points. During its meeting with the Fed, NAFCU officials also expressed concern that the Fed’s debit interchange fee price cap is likely to have a trickle-down effect on all debit card issuers, regardless of size.
When Congress mandated that the Fed regulate interchange fees it said that it should only apply to issuers with assets of more than $10 billion.
NAFCU’s board members and senior executives attended the meeting, which was hosted by Federal Reserve Governor Sarah Bloom Raskin.