MADISON, Wis.-Charges related to the corporate credit union bailout helped eliminate almost $6 billion in credit union capital in March, depleting industry capital from 10.3% at the end of February to a 15-year-low of just 9.6% at March 31.
"Most credit unions in our (monthly) survey did cover the full cost or most of the cost through March," said Bill Hampel, chief economist for CUNA.
As a result, total credit union capital declined from $88.9 billion at Feb. 28 to $83.1 billion at March 31, according to CUNA's monthly FAST survey of almost 500 credit unions.
According to NCUA, the bailout charges will push more than two-thirds of the nation's 7,800 into the red for 2009, and cause 225 credit unions to be under capitalized under its minimum capital rules.
The hope among credit union leaders is that the pending corporate bailout bill in Congress will allow credit unions to stretch out the $6-billion cost of the corporate bailout over as many as eight years and allow credit unions to recapture some of the write-down in capital they recorded in the first quarter.
CUNA's March's data was filled with gloomy figures; like a rise in loan delinquencies from 1.48% at the end of February, to 1.54% at March 31, the highest since 1991, and a 1% drop in lending for the month. Lending grew just 0.6% for the first three months of the year.
First mortgages grew by 1% and ARMs by 0.5% and used auto loans by 0.4% in March; while home equity loans declined by 1.1%, credit card loans fell 0.7% and unsecured personal loans dipped 0.6% for the month.
In contrast, savings grew by 1.2%, $9 billion, in March and by 5.7%, almost $35 billion, for the first quarter.
Hampel predicted weak-to-no loan growth over the next several years, with stronger savings growth.
