The industry's overall delinquency ratio is continuing its 10-year drop, but the decline is slowing.

In the second quarter, fewer states' credit unions saw increases in loan delinquency than in the year-earlier period - 16 versus 19 - according to Sheshunoff Information Services.

Overall, however, the improvement is slowing. In the first half of this year the percentage of loans delinquent dropped to 0.83%, from 0.87% last Dec. 31. In the first half of 1994 the figure dropped from 1.02% to 0.89%.

In fact, some observers say delinquencies are about to begin increasing again.

William F. Hampel Jr., chief economist of the Credit Union National Association, said credit unions should expect to see delinquency increase across the board next year as portfolios mature and lending volume slows down.

Yet despite this forecast, widespread concern about delinquency hasn't spread from the banking industry to credit unions. The reason, Mr. Hampel said, is that banks, more than credit unions, used credit cards to drive their recent loan growth.

"Banks have always charged off large amounts of credit card loans," he said.

Local economic problems seem to be behind the higher delinquency in some states.

Delinquency at South Dakota credit unions rose by nearly half, to 1.28%. "I would relate it to ag loans," said Donald Couch, president of the South Dakota Credit Union League. "Some of our credit unions make agriculture- related loans, and they had some delinquencies during the drought."

Hawaii credit unions' figure rose to 1.41% from 1.31%. Dennis Tanimoto, president of the Hawaii Credit Union League, cited recessionary conditions and cutbacks by the state government.

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