Bank, Thrift Earnings Tumble 94% From Year Ago
WASHINGTON-Bank and thrift earnings slid a whopping 94% in the third quarter from one year earlier, to $1.7 billion, according to data released by the Federal Deposit Insurance Corp. (FDIC). Data show the industry's return on assets fell to 0.05%, from 0.92% a year earlier-the second-lowest quarterly ROA reported in 18 years. The FDIC said that "evidence of a deteriorating operating environment was widespread." Earlier, NCUA reported that credit unions' key profitability ratio, return on assets, eroded to 0.12%, the lowest level in decades. Among banks, meanwhile, nearly 60% of institutions reported year-over-year declines in quarterly net income, while one in every four institutions reported a net loss during the third quarter.
The FDIC said the earnings decline primarily was due to rising loan-loss provisions, which totaled $50.5 billion in the third quarter, more than three times the $16.8-billion level of a year earlier. The industry also reported a $7.6-billion loss on the sale of securities and other assets in the third quarter, compared to a $77-million gain a year earlier. The housing crisis caused nine banks to fail during the quarter, and more collapses are likely. The agency added more than 50 institutions to the troubled bank list, which reached 171 as of Sept. 30. Assets held by these institutions jumped $37 billion, to $115.6 billion. It was the first time in 14 years troubled bank assets topped $100 billion, the agency said. Failures also continued to pressure the ratio of reserves to insured deposits in the Deposit Insurance Fund. Reserves dropped 23%, to $34.6 billion in the third quarter. As a result, the DIF ratio fell to 0.76%, well below the statutory minimum of 1.15%.
The FDIC already has said it will double premiums next year to between 10 to 14 basis points. If the ratio continues to drop, the agency may need to raise that level even higher.
No Foreclosures During Holidays
JANESVILLE, Wis.-Just in time for the holidays, and before more members lose their homes, Blackhawk Community Credit Union here has placed a temporary halt on foreclosures. "We recognize that the economic downturn has dramatically affected many borrowers," explained Al Herbst, VP of real estate services, who said the action is effective Nov. 26-Jan. 9, 2009. "The immediate goal is to allow families to remain in their homes during the holidays while every viable financial option is explored." BCCU members with first mortgages in foreclosure were sent letters encouraging them to contact the mortgage department to discuss options.
Mich. League Downsizes Facilities
LANSING, Mich.-The Michigan Credit Union League (MCUL) and its subsidiaries, CUcorp and CU Village, are making two facility changes to help cut costs.
The MCUL's headquarters in Northville Township are being downsized in a building swap with Detroit Edison CU. Detroit Edison bought the 52,000 square-foot facility from the MCUL, while CUcorp, CU Village and select administrative staff took over the former Detroit Edison 14,000 square-foot property in Livonia.
The swap allows MCUL to move its headquarters to a new Lansing location by Jan. 1, 2009. The new 8,700 square-foot downtown Lansing location includes naming rights on the building.
"The facility changes will save the MCUL and its subsidiaries about $250,000 per year," said MCUL CEO David Adams. "The new headquarters is part of a long-term plan to enhance our presence in Lansing that will add to the grassroots lobbying the MCUL has already established in the state's capital."
For info: www.mcul.org.
National Video Competition Planned
WASHINGTON-NAFCU Services Corp. has announced plans to sponsor a national competition to develop 30- or 60-second video that can be used by CUs on TV and online to increase brand awareness. NAFCU Services Corp. has partnered with GeniusRocket to implement the competition. Advertisers post "Requests for Brilliance" (RFBs), individuals and firms around the world upload their responses, and visitors to the website rank the ones they like the best, NSC reported. Winners potentially will receive awards from NAFCU Services of $3,000, $1,500 and $500. Once purchased, the videos will be made available to NAFCU members at no charge, with customization for an individual credit union available directly from the creative professional for a set fee of $150.
The RFBs can be seen at www.geniusrocket.com/rfb/nafcu/national-association-federal-credit-unions.
