CUs Urged To 'Stand Up To The Examiners'

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CUNA economist Bill Hampel a mixed-bag credit union forecast for the rest of 2006 and into 2007.

Return on Average Assets (ROA) will rise to 0.80% next year from this year's forecasted 0.73%.

"But I don't believe this forecast. ROA should be closer to 50 basis points (bps)," said Hampel. Loan growth will decline to 6.0% from the 11.3% mark in 2005, he said.

Net Worth Ratio (capital) will remain near 11%, prompting Hampel to scold, saying, Most of you have loan policies that are too tight. Capital above 8% is too high."

Overcoming objections from examiners whenever there is slippage in the numbers puts credit unions on the defensive, Hampel offered.

"Stand up to the examiners. That's part of your job. It's also your job to please the members (which entails providing more needed loans)," Hampell observed. "The job of examiners is to protect the insurance fund by protecting net worth ratio and net income. I understand that once you've earned a CAMEL 1 that any drop looks like a trend to them. But if you keep a CAMEL 1 too long I'd say you're pleasing the examiner too much and the members not enough."

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