e-Weekly

March 9, 2011

NCUA reports credit union key ratios improved in 2010
Nationwide, credit union membership inched up during 2010, totaling 90.5 million by the end of the year, and credit union investment, earnings and assets also grew last year, the National Credit Union Administration (NCUA) recently reported.

"While credit unions are still not back to their pre-recession performance, they are showing decent signs of recovery," Credit Union National Association (CUNA) Chief Economist Bill Hampel said. "CUNA expects 2011 to be even better than 2010, with continued declines in loan losses and some modest improvement in earnings," Hampel added.

The NCUA's December 2010 Call Report data noted that loan delinquencies and charge-offs both declined during the year. Although total loans outstanding fell by 1.3% in 2010, used-vehicle loans increased by 3.4%, first mortgage real estate loans increased by 2.7%, and unsecured credit card lending rose by 3.1%. The agency also noted a 16.4% decrease in new-car loans during 2010.

According to the NCUA report:

• Assets increased 3.4%, totaling $914.5 billion;
• Loans declined 1.3%, totaling $564.8 billion;
• Shares increased 4.5% to $786.5 billion;
• Investments increased 13.4% to $238.9 billion; and
• Net income increased 208.3%.

Net income for 2010 totaled $4.6 billion, up from 2009's total of $1.5 billion.

NCUA Chairman Debbie Matz said that "credit unions, as a whole, are exhibiting positive trends in their operations," adding that the recovering economy helped net worth climb to 10.1% and increased credit unions' return on average assets (ROA) by 33 basis points. Credit union ROA totaled 0.51% in 2010, up from the 2009 total of 0.18%. "To the maximum extent possible, NCUA will continue to ensure that this progress persists and credit unions remain well-positioned to serve American consumers," Matz added.

April 1st appraisal deadline draws near
There is now less than four weeks to go before the new property valuation rules take effect. These new National Credit Union Administration (NCUA) guidelines state in part that automated valuation models (AVMs) and tax assessments will no longer be allowed unless they are accompanied by a property condition report (PCR) and extensive back-testing. A sample PCR and back-testing report are available at the MemberClose Resource Center.

Credit unions that currently make use of the Association’s Policy Pro service can find an up-to-date appraisal policy there. Credit unions not using the service can learn more about it by clicking here.

Other parts of the guidelines address the rules that pertain to ordering full appraisals. MemberClose has a number of tools to help you manage this process. These tools include easy access to multiple appraisal management companies (AMCs) and, in the very near future, the ability to load local appraisers into an automated ordering system. To request more information on full appraisal options available through MemberClose, click here.

Credit union lenders are invited to see how MemberClose can provide a customized solution for their credit unions by signing up for a free Web Demo or by calling 1-888-746-2476.

http://www.memberclose.org/newappraisalguidelines.html
http://www.memberclose.org/index.html
http://www.cuassociationri.org/CU_PolicyPro_404.html
http://www.memberclose.org/forms/inforequest.html

Register NOW for the Great New England Credit Union Show
Don’t miss the 2011 Great New England Credit Union Show, the networking event of the season! Exhibitors and sponsors alike are teaming up for a day full of important insights and high energy. Now in its third year, the show offers attendees access to leading exhibitors, top quality education, and timely industry updates, with featured speakers Congressman Barney Frank and New England Patriots’ own Steve Grogan.

There are two ways to register: 1) Vendor Invitation – contact any one of our participating vendors – listed on the attendee page via drop-down box. They are waiting to hear from you! Or 2) Register through the Association’s website. Questions? Contact Bonnie Doolin, bdoolin@cucenter.org.

www.greatcushow.com

Consumer credit up 2.5% in January, down at credit unions
U.S consumer credit rose at a 2.5% annual rate or $5 billion in January, to $2.412 trillion. It was the fourth consecutive month that debt rose, although credit card or revolving debt dropped 6.5%--a six year low. Non-revolving debt rose at 7%.

The statistics, from the most recent Federal Reserve's Consumer Credit report, were above economists' estimates of a $3.5 billion overall credit increase, said Reuters (March 7). The numbers indicate the economy is gaining strength, and that consumers are less risk-averse than a year ago.

For credit unions, members borrowed $225.7 billion, a decrease from $226.5 billion in December and $227.5 billion in November. In first quarter of 2010, members borrowed a total of $228 billion.

Revolving credit, or credit card debt, dropped $4.2 billion to $795.5 billion in January, said the Fed's statistical report. That decrease was the 28th decline in 29 months and brought the figure to its lowest level since September 2004, said The Wall Street Journal (March 7).

Credit union members' credit card debt also dropped, to $35.6 billion, from $36.3 billion in December and $35.8 billion in November. In first quarter of 2010, members' revolving debt was lower, at $34.3 billion.

Nonrevolving credit--namely closed-end loans for big ticket items like cars, college education and vacations--also rose in January by $9.3 billion or 6.9%, to $1.627 trillion. Credit union members borrowed $190.1 billion in these loans, the same as in December and in fourth quarter, but less than the $193.7 billion they borrowed in first quarter 2010.