CU Profitability Slides Again During First Qtr.
ALEXANDRIA, Va.-Profitability at the nation's credit unions declined again in the first quarter, for the third quarter in a row, to just 0.81% return-on-average assets, the lowest in more than a decade, according to NCUA. The results were released at the same time banks reported strong profits (see page 2).
That compares to an ROA of 0.85% for the fourth quarter in 2005, 0.92% for the third quarter, and 0.93% for the third and second quarters. Lending was tepid in the first quarter, with loan growth of under 1% (0.9%), while share growth was strong at 3%.
Asset quality remained strong, with the loan delinquency ratio declining to just 0.59%, and the charge-off ratio falling to a low 0.49%. First mortgages increased by 2.2% and other mortgages, which includes second mortgages and home equity loans, rose 2.7%. New auto loans grew by 0.9%, used auto loans declined by 0.4%.
NCUA Delays Until June FOM Amendments
ALEXANDRIA, Va.-Due to legal considerations, the NCUA Board last week postponed a controversial vote on an amendment to the agency's field of membership rules that would bar community charters and single common bond credit unions from adding underserved communities to their FOMs. The move to amend the FOM rule was forced by a legal challenge to the underserved rules brought by the American Bankers Association. The bankers charge that NCUA has violated provisions of the Federal Credit Union Act by granting more than 200 underserved FOMs for community chartered CUs, and that the FCU Act only allows multiple group CUs to add underserved communities.
"It is regrettable that-because of lawsuits brought by the banking industry-the affected credit unions must continue to live with uncertainty about serving working families in underserved areas," said CUNA CEO Dan Mica in a released statement. "In fact, this entire proposal was necessitate by legal action brought by bankers-shame on their hypocrisy!" Still, CUNA praised the NCUA for taking its time to draft what CUNA hopes will be "a well-reasoned final rule."
The agency is expected to take the matter up at its June meeting, when the regulator is also slated to take up its equally controversial charter conversion rule.
DNA Helps To Nab Suspect
VICTORVILLE, Calif.-In the latest application of DNA testing, a 36-year-old gang member was convicted last week of a 2003 armed robbery at Victor Valley FCU even though no one was able to physically identify him or his two accomplices who were all hidden behind ski masks during the hold-up.
Johnny Rice, a convicted sex offender and gang member, was found guilty of five counts of robbery and one count of receiving a stolen vehicle. Rice was tracked down after police recovered the robbers' getaway car and the ski masks inside and were able to scrape DNA from saliva inside one of the masks that matched Rice's DNA.
MasterCard Shares At $39
WALL STREET-MasterCard International priced its long-awaited initial public offering last week night at $39 a share, slightly below the market's expectations.
The world's second-largest payments company plans to raise as much as $2.4 billion with the sale of 61.5 million shares, representing about 46% of the company, when the deal hits the market. The remainder of shares will continue to be controlled by its large bank owners-Bank of America, Citibank, JP Morgan Chase and HSBC-which own more than 30% of the cards company. MasterCard had originally planned to price the shares between $40 and $43.
Proceeds from the offering will mostly be used to buy back the company's Class B shares, which are held by MasterCard's 1,400 bank-owners.