2009 Overview of Credit Unions
By: Gardiner Thomsen CPAs | email
It’s been a difficult year for many credit unions. Due to the struggling economy in 2009, delinquency has increased 0.25%, charge-offs and bankruptcies continue to rise in numbers and because of status of the economy, many credit unions have had to increase their allowance for loan loss reserve in order to absorb some of these increased losses.
Also, credit unions were required to contribute to the Corporate Stabilization Fund. Contributions to the plan are expected to continue over the next 6-7 years but will be discretionary and only required if authorized by the NCUA Board of Directors.
Through June 2009, credit unions saw a large amount of share growth along side minimal loan growth creating increased liquidity. Due to this share growth, investments in short term commercial bank and corporate CDs has risen 5%. Even though the investments have grown, income from these investments declined 20% annually due to the decreasing rates offered.
Despite the hardships faced by credit unions in 2009, Iowa credit unions still managed to show a respectable 0.90% return on assets as of June 2009, up from 0.80% a year ago. Iowa credit unions are continuing to grow and maintaining a very healthy 10% capital ratio.
