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Washington
NCUA 2010 financial results preview 2011s challenges
ALEXANDRIA, Va. (3/31/11)--The National Credit Union Administration (NCUA) on Wednesday warned that “elevated levels of credit risk, interest rate risk, and concentration risk” will continue to challenge credit unions in 2011. NCUA Chairman Debbie Matz in a release added that “credit unions still face challenges in overcoming the effects of the economic downturn,” and said that NCUA examiners are working to “help mitigate existing and potential risks” to credit unions and to help those credit unions “maintain stable balance sheets.” These comments accompanied the release of the NCUA’s 2010 credit union industry financial results. Real estate and business loan delinquencies increased during 2010, but the agency in its report noted that delinquent loans as a percentage of total loans dropped to 1.74%. Net loan charge-offs also declined during the year. Modifications for real estate, consumer, and business loans increased $3.1 billion since March of 2010, and Matz noted that these types of modified loans could still create a risk of delinquency into 2011. Matz in her statement added that the NCUA “will maintain close supervision of credit unions in this area.” The agency is also “considering ways to enhance the business lending regulation to better ensure safe and sound underwriting and credit risk management,” Matz said. Matz also noted that concentration risk “has been an area of emphasis for NCUA examiners in recent months,” saying that the “high level of real estate loans to assets coupled with the stresses in real estate values across the country highlight the need for sound concentration risk mitigation practices.” The agency is developing a proposal that would place more emphasis on concentration risk factors for purposes of its prompt correct action regulations. Overall, the NCUA noted increases in credit union assets and net worth during the year, with asset increases totaling $29.87 billion and net worth increases totaling $4.51 billion at the end of the year. Earnings also slightly increased, with the return on average assets ratio of all federally insured credit unions increasing from 0.18% to 0.51% during the year. For the full NCUA release, use the resource link.
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