NCUA Issues Letter to Credit Unions on State of CU Industry

Wednesday, October 12, 2011 11:14:00 AM

ALEXANDRIA, Va. - The NCUA has released a Letter to Credit Unions (11-CU-16) as well as the Financial Trends in Federally Insured Credit Unions, a quarterly report analyzing credit union financial trends for the first half of 2011, using data compiled from June 30, 2011 call reports. The report is intended to help credit unions understand national trends and risks which NCUA will continue to closely monitor and supervise.

Despite the sluggish economy, trends in the report show credit union growth. Notably, lending grew for the first time in four quarters, and credit unions increased their return on average assets by 26 basis points - from 51 basis points at year-end 2010 to 77 basis points through the second quarter. As a result of this higher net income, the aggregate net worth ratio bounced back above 10%.

While overall loan growth remains relatively flat, historically low-rate first mortgage real estate loans continue to grow, a trend, which, according to NCUA, could impact credit unions' future earnings potential.

Accordingly, the letter states, NCUA is focusing supervisory efforts on credit unions with elevated levels of credit, interest rate, concentration, and strategic risk.

The Letter to Credit Unions is available online here. The Financial Trends in Federally Insured Credit Unions document is available for download by clicking here.

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