Net income and net worth increased at federally insured creditunions during the third quarter, but overall lending was flat andthe rate of member bankruptcies increased over last year, accordingto data released last week by the NCUA.

|

From July through September, those credit unions had an 11.3%increase in net income, from $1.8 billion to $3 billion. Net worthrose from $89.3 billion to $90.6 billion, a 1.4% jump.

|

The delinquency ratio rose to 1.74% from 1.73% in the secondquarter. Overall credit union lending was virtually unchanged, itrose 0.1%. Real estate loans rose 0.1%, following a 0.4% growth inthe second quarter. Used car loans rose only 1.8% and unsecuredloans increased by 1.4%. New vehicle loans fell 3.6%.

|

The data also showed that the number of members filing forbankruptcy was 268,141 through the third quarter of 2010, comparedto 246,386 over the same nine months of 2009. Member bankruptciesreached 323,737 at the end of 2009.

|

Foreclosed and repossessed assets grew by 8.3% to $1.8 billionin the third quarter.

|

NCUA Chairman Debbie Matz sought to highlight the positiveresults, while acknowledging the difficulties.

|

“Positive trends are emerging,” she said in a statement. Matzsingled out a 0.45% increase in return on average assets, comparedwith a 0.40% rise during the second-quarter.

|

She added that while credit unions are making progress, theagency is well aware of the “stressed financial environment” facingmany credit unions and that is why the agency is increasing thesize of its examination staff and making the examination processmore rigorous.

|

The 2011 budget approved by the NCUA Board last month includesfunds to add 78 people to the examination staff, including 60 fieldstaff.

|

The difficulties facing credit unions were also evident inNAFCU's annual survey in preparation for the meeting it held withthe Federal Reserve last week.

|

|

The report said that increased assessments by the NCUA, coupledwith more deposits and slower loan growth have seriously strainedmany credit unions. Though the association concluded that the“conservative and prudent management” of many credit unions helpedthem deal with the challenges more effectively than some otherfinancial institutions.

|

NAFCU's report concluded that a key reason for the loan declineis that the recession and slow recovery caused federal creditunions to tighten their lending standards. According to the NAFCUreport, 47.1% of respondents said they were tightening theirstandards for unsecured loans. That's a decline from 63.6% lastyear.

|

The survey also found that 56.2% of respondents tightenedstandards on unsecured credit cards and 40.6% tightened standardson first mortgages.

|

Credit union executives cited rising delinquencies andcharge-offs, declining property values and funding sourceconstraints as key reasons for the higher standards.

|

The survey also found that 71% of respondents had seen increasedforeclosures notices in the past year and 63.1% had an increase inreal estate foreclosures.

|

The problems of corporate credit unions not only caused naturalperson credit unions to have to pay more to the NCUA, but alsocaused them to rethink how much money they want to deposit in them.The survey showed that only 5.1% of respondents will increase theirlines of credit at the corporates, compared with 7.3% lastyear.

|

In its report, NAFCU said the biggest regulatory concerns arethe new regulations likely to be issued by the Bureau of ConsumerFinancial Protection that will be launched next year and the cap oninterchange fees that Congress authorized the Fed to set.

|

In addition, the association said that the Financial AccountingStandard Board's proposal to expand fair value accounting methodswould “add ambiguity and volatility to credit union balancesheets.”

|

[email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.