ALEXANDRIA, Va.-Increasing loan losses forced credit unions to move billions of dollars of new funds to reserves in the third quarter and pushed the key profitability ratio, return-on-assets, down to just 0.12% for the quarter, the lowest in decades, NCUA reported.
While credit unions remained just in the black, NCUA reported that the loan delinquency ratio rose to 1.13% for the third quarter, from 0.97% at mid-year; while the charge-off ratio moved up to 0.75%, from 0.71%, portending more troubles down the road.
The third quarter report for credit unions came a day after thrift regulators announced the savings and loan industry lost $4 billion in the period, the fourth straight quarterly loss.
For credit unions net income was down more than 17% for the first three quarters of the year, compared to the same period last year.
"Credit unions' continued high level of net worth will help them weather today's turbulent economy; however, credit unions are not immune to financial stress, as noted in the delinquency increase in categories such as credit cards and mortgage loans," said NCUA Chairman Michael Fryzel. "NCUA is keeping a watchful eye on these adverse trends as part of a broader commitment to maintaining a safe and sound credit union industry."
In the third quarter: loans increased by a healthy 2.5%, while savings rose a tepid 0.9%. This continued to strain liquidity, with the loan-to-share ratio rising to almost 84%. The net worth ratio remained just over 11% at the end of the quarter.
The number of federally insured credit union fell to just 7,904 at the end of the third quarter, down from 7,972 at mid-year.
