SACRAMENTO, Calif.-State regulators said the second quarter saw a continued increase in loan delinquencies and loan losses and of troubled institutions among California's CUs.
The delinquency ratio for all CaliforniaCU topped 2% at mid-year, with state charters particularly hard-hit at over 2.2%, William Haraf, commissioner of the state's Department of Financial Institutions, told the California CU League. That compares to a national delinquency ratio of 1.58%.
Loan defaults surged 12% to more than $1 billion, while the charge-off ratio rose to almost 2%. Delinquencies among real estate loans continued to rise even faster, by 27% in the second quarter to $680 million. Delinquencies for member business loans also spiked in the second quarter to 1.78%, from 1.23% in the first quarter, the DFI Commissioner reported.
In addition, the number of problem credit unions, those rated CAMEL 3, 4 or 5, rose to 53, from 41 at the end of the first quarter.
At mid-year, 54 California CUs were under some kind of supervisory agreement, either a cease and desist order or a letter or understanding and agreement with the DFI or NCUA.
But, even with the plunge in real estate prices over the past two years and the rise in the state's unemployment to 11.6%, the analyst sees positive signs that the worst may be over. For example, home prices have apparently stopped declining and may be rising, he said, adding that the increase in unemployment has also slowed. "While we would like to see a 'V-shaped' recovery, with a quick upturn, what we're seeing is a slowing of the descent," he added.
