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NCUA UpdateAlaska Credit Union League
NCUA Board MemberChristiane Gigi Hyland
April 30, 2010
ECONOMY
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Unemployment
“It all boils down to jobs at this point”
Mark Zandi, chief economist and co-founder of Moody’s Economy.com
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Source: Bureau of Labor Statistics
0% to 5%
DC -0.9
-30% to -10%
MD -5.4
-3.7NJ -4.9
-2.7
-2.3-4.1
-2.3
0.0
1.3
1.6
2.6
-0.5
0.1
-4.2
1.3
-2.1-2.5
-0.9
--4.2
-2.8
DE -4.7
CT -4.6
RD -3.0
MA -1.5
VT 2.2NH -3.1
-0.7
-9.9% to -5%
Source: Federal Housing Finance Agency
2008Q3 to 2009Q3, % change in average price of existing single-family homes
Housing Market
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-8.7
-24.5
-5.4-
17.1
-2.8
-4.7
0.0-
10.5
-8.7-8.8
-7.7
-3.6
-7.6
U.S. = -3.8%
-2.0
-13.4
-2.40.3
-1.4-0.7
-3.3
-2.2
-2.2-1.0
-4.9% to-0.1%
Foreclosures Continue to Rise
5 Source: RealtyTrac.com
#of properties with foreclosure filing, % change 2008-2009
Increase Decline U.S. average: 21.2%
35.3
89.6
20.8
182.6
25.5
39.693.5
5.9101.6
44.382.9
0.2
10.2
NH 8.7
DC -22.6
MD 33.7
NJ 1.1
DE 20.6
CT -10.2
RD -23.1
MA -18.5VT 4.4
15.9
31.85.5
45.6
64.8
56.2
-8.8
-42.2
5.1
3.8
90.3
4.0
79
156
34.1
24.5
-9.933.7
136
-16.1
-10.5
67.8-7.8
11.5
11.5 0.7
20.2
6.4116
*Some increases may be overstated due to data collection changes or improvements
Households are Under Stress
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% of number of all mortgage loans 30+ days delinquent, 2009Q3
Source: Mortgage Bankers Association
U.S. average: 9.6%
6.9
6.5
10.4
13.8
7.8
5.2
8.2
11.67.6
6.6
5.3
5.16.6
NH 8.5
DC 7.2
MD 9.7
NJ 8.9DE 8.4
CT 8.4
RD 9.9
MA 9.0
VT 5.5
8.6
106.6
7.2
10.1
6.8
9.1
6.2
3.9
8.0
4.3
9.3
7.2
10.7
11.8
12.5
11.29.3
13.6
9.4
10.3
9.610.8
8.9
7.410.1
8.7
12.2 8.5
Comparing to national average: -worse, -at or near -better
Commercial RE Sales Price Trends
7 Source: National Association of Realtors
-37% – -30%-29% – -20%-19% – -10%-9% - 0%
Based on level of commercial transactions in 2009Q3, Y/Y price change
-27
-29
-23
-19N/A
-36
-32-21
-23
-23
-10
-19
-20 -25
-21
-33
-18
-8
-22
-23
-21
0
-14
-24
-18
-23
-26
-23
-25
-20
-13
-24
-18
-21-24
NH: -20
DC: -17
MD: -26
NJ: -13DE: -18
CT: -17
RD: -23
MA: –26
-39 -17
-20
-15-14
-30
-10VT: -15
Credit Union Trends
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Net Worth Ratio
9•Includes adjustments made after NCUSIF stabilization expense was announced.
Net Worth Ratio Alaska FICUs vs. All FICUs Trends
10•Includes adjustments made after NCUSIF stabilization expense was announced.
Supplemental Capital
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Launched an initiative in December 2008 after conversations with state regulators.
Internal working group at NCUA researching and reviewing a variety of issues around supplemental capital including consumer protection, mutuality and safety and soundness.
Issued White Paper on April 12th. Available at NCUA’s web site.
Return on Average Assets (ROA)
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1.02%0.96%
1.07%0.98%
0.91%0.85% 0.82%
0.64%
0.31%
0.16%-0.04%
0.20%
-0.20%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
ROA w/o NCUSIF Expense ROA including NCUSIF Expense
Many credit unions took the NCUSIF stabilization expense in
*2008 ROA after NCUSIF stabilization expense estimated base on 5300 changes after the announcement
Return on Average Assets (ROA)
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0.85% 0.82%
0.63%
-0.04%
0.20%
0.78% 0.79%
0.58%0.44%
0.71%
-0.10%0.00%0.10%0.20%0.30%0.40%0.50%0.60%0.70%0.80%0.90%
2005 2006 2007 2008 2009
All FICUs Alaska FICUs
Delinquency & Charge-Offs
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Delinquency Comparison
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Charge-Off Comparison
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Delinquency by Type
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0.34%0.53%
0.97% 1.10%
0.67%
1.87%
1.16%
2.46%
1.20%
2.26%
1.56%
3.02%
1.95%
3.68%
1.45%
3.51%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
Real Estate MBLs Indirect Participations
2006 2007 2008 2009
10 Year Comparison - FICUs
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December 31, 2000
December 31, 2009
Annual % Chg
Number of FICUs 10,316 7,554 -2.9%
Total Assets $438.2 billion $884.8 billion 11.3%
Total Shares $379.2 billion $752.7 billion 10.9%
Total Loans $301.3 billion $572.4 billion 9.9%
Average Asset Size $42.5 million $117.1 million 19.5%
Net Worth Ratio (Aggregate)
*Estimated prior to 2000
11.43%* 9.91% -1.48%
Share Composition
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Changing Balance Sheet
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12/31/00 12/31/09
% Real Estate Loans to Total Loans 38.71% 54.07%
Net Long-Term Assets to Assets 22.67% 31.50%
% of Regular Shares to Total Shares 34.28% 26.54%
% of Fee Income to Net Income 64.89% 496.00%*
*Net Income without stabilization Income or expense
Concentration Risk
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NCUSIF
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Number of Credit Union FailuresFY 00 – FY 09
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NCUSIF Charges, Provision for Loss Expenses and Reserves
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History of Charges to NCUSIF Reserves
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Recession July 1990-March 1991
Recession July 1981-Nov 1982
Regulatory Issues
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Current Regulatory Issues
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Proposed Corporate Credit Union rule Received over 800 comment lettersNext step is to sort through them, discuss and refine the
proposal.
Corporate “Troubled Assets”The proposed rule contemplates that there will be no
legacy assets.NCUA is working closely with Treasury to find a
mechanism to deal with the troubled bonds.
Current Regulatory Issues
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Proposed Field of Membership changesAffects community charters and rural areasComment letters were due April 15th (extended from
March 1st)Proposal would
Define what constitutes a local community based on objective, quantifiable criteria;
Define the term “rural district”;Define the term “in danger of insolvency” for emergency
merger purposes; andClarify marketing plan requirements for credit unions
converting to or expanding their community charter.
Current Regulatory Issues
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Proposed changes to RegFlexRemove the exemption from the fixed assets rule;Remove the exemption from required stress testing of
portfolios;Remove the exemption requiring a personal guarantee on
MBLs; andRemove the exemption of discretionary control of
investments.Out for a 60 day comment period.
Current Regulatory Issues
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Just issued a proposed small dollar loan rule for a 60 day comment period
The proposal would amend the general lending rule to allow credit unions to charge a higher interest rate (28%) for closed-end small dollar loans (i.e., $200-$1,000).
The proposal would also: Allow credit unions to charge a flat $20 application fee for such loans; Require a minimum maturity term of one month and a maximum maturity term of six
months; Limit FCUs from making more than three, STS loans in any rolling six-month period
to any one borrower and making no more than one, short-term, small amount loan at a time to a borrower;
Prohibit FCUs from rolling-over any STS loan; Require FCUs to include in their written lending policies, a limit on the aggregate
number of loans and aggregate dollar amount of loans made under this section and implements appropriate underwriting guidelines to minimize risk; for example, requiring a borrower to verify employment by producing at least two recent pay stubs.
Opportunities for Credit Unions
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Reach out to everyone in the FOMEnsure the board, management and staff are as diverse
(in age and ethnicity) as your credit unionEducate, educate, educateMember business loansSmall dollar loans
Questions?
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