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," Bill Hampel, chief economist for CUNA., told The Credit Union Journal yesterday.
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.
Meantime, the corporate bailout bill continued to advance in the Senate yesterday with several amendments being voted on the way to expected passage this afternoon. The bill will allow credit unions to stretch out their payments to fund the corporate bailout and recapture some of the capital depleted last quarter.
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.
CUNA’s March’s data was filled with gloomy figures. Like a rise in loan delinquencies to 1.54%, the highest since 1991, and a 1% drop in lending. Lending grew just 0.6% for the first three months of the year. In contrast, savings grew by 1.2% in March and by 5.7% for the first quarter.
Hampel predicted weak-to-no loan growth over the next several years, with stronger savings growth.
