DENVER – Despite return on assets dropping to their lowest levels since 1993, Colorado credit unions are poised for a rebound this year. The Colorado Credit Union League reported that ROA, which is net income divided by average assets, decreased to 0.62% in 2004 compared to 0.71% in 2003. According to a March 11 article from the Denver Business Journal, Colorado credit unions had total deposits of $10.25 billion, a 4.5% increase from a year ago, trailing the 5.4% national deposit rate. The slowed economy impacted Colorado as it did most other states. Lending, for instance, totaled $8.96 billion, 10.4% less than the rate for loans nationwide. Several credit union CEOs were optimistic that as the state's economy improves, delinquency levels will decrease and ROA will rise, the article read. Colorado credit unions, as with others nationwide, are starting to impose tougher credit standards and charging off more delinquent loans. Charge-offs are a double-edged sword because while they can improve delinquency numbers, they can also negatively impact a credit union's net income. Still, some CUs may be willing to operate with a lower ROA to provide more services to members, one CEO said. Because of their shareholder structure, Colorado's commercial banks saw a 1.27% ROA in 2003, up from 1.25% in 2003, the article reported.
© Touchpoint Markets, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more inforrmation visit Asset & Logo Licensing.