ALEXANDRIA, Va. – The nation’s credit unions reported a loss for the fourth quarter of 2008–a whopping $2 billion–the first quarterly loss ever for the industry,.
The fourth quarter loss pushed the return-on-average assets down from a mere 0.51% at the end of the third quarter to just 0.31% for the year, the lowest in decades for credit unions, NCUA reported yesterday. That compares to 0.63% ROA for 2007, and 1% for an average year over the past decade.
The fourth quarter loss was caused by the addition of billions of dollars in new loan loss reserves as the industry’s delinquency ratio surged to a decades-high of 1.37% at year-end, and charge-offs rose to 0.84%. Many credit unions, especially in the four "Sand States" of California, Nevada, Arizona and Florida, reported delinquency and charge-off ratios twice as high.
Average net worth for the industry fell below 11% for the first time in two years, to 10.96%, still a high figure.
"Adverse economic conditions and distress in the financial sector places credit unions at greater risk; however, net worth remains high helping to stabilize the industry," said NCUA Chairman Michael Fryzel. "With safety and soundness the priority, NCUA has proactively adopted a more frequent examination contact schedule and activated a national examination team with the knowledge, skill, and experience to effectively deal with current issues."
Loans grew by less than 1% in the fourth quarter (0.7%); while savings grew by just under 2% during the period.
For the year, loans grew by 7.1% and savings by 7.7%.
