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June 12, 2013
CUs at pre-recession levels in key areas
June 13, 2013 – NAFCU's June CU Industry Trends report shows loan quality at federally insured credit unions at its strongest in several years, with loan loss reserves, delinquency ratios and net charge-off ratios at their lowest levels since before the financial downturn.
The NAFCU report, 21 pages long, provides time trends of credit union growth and performance as well as credit union loans and deposits by type, asset class, and region.
The report shows that several measures of loan loss and risk have improved significantly across most states and asset classes. This includes the "Texas ratio," which gives an indication of an institution's ability to absorb losses. It is determined by dividing delinquent loans plus foreclosed assets by total equity plus loan loss reserves. At the onset of the financial crisis, insured credit unions' Texas ratio was about 6 percent. It climbed above 12 percent in 2009, and as of March 31 of this year, that ratio had declined almost to 6 percent.
"Assuming the economy continues to improve going forward, we expect credit unions' loan portfolios and overall financial strength to continue on an upward trend," said NAFCU Economist David Carrier.
The report also shows total shares in credit unions with CAMEL codes of 4 or 5 have returned to pre-recession levels of about 1.6 percent, down from about 5.75 percent at the height of the crisis.
The CU Industry Trends report is produced quarterly by NAFCU's research staff and provided free to NAFCU members.
The NAFCU report, 21 pages long, provides time trends of credit union growth and performance as well as credit union loans and deposits by type, asset class, and region.
The report shows that several measures of loan loss and risk have improved significantly across most states and asset classes. This includes the "Texas ratio," which gives an indication of an institution's ability to absorb losses. It is determined by dividing delinquent loans plus foreclosed assets by total equity plus loan loss reserves. At the onset of the financial crisis, insured credit unions' Texas ratio was about 6 percent. It climbed above 12 percent in 2009, and as of March 31 of this year, that ratio had declined almost to 6 percent.
"Assuming the economy continues to improve going forward, we expect credit unions' loan portfolios and overall financial strength to continue on an upward trend," said NAFCU Economist David Carrier.
The report also shows total shares in credit unions with CAMEL codes of 4 or 5 have returned to pre-recession levels of about 1.6 percent, down from about 5.75 percent at the height of the crisis.
The CU Industry Trends report is produced quarterly by NAFCU's research staff and provided free to NAFCU members.
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